Shanghai bourse studies overseas warehousing for bonded copper contract

Credit: Wikimedia Commons.

The Shanghai International Energy Exchange (INE) is studying the possibility of using overseas warehousing for its bonded copper contract as well as listing aluminum futures, its parent bourse said on Friday.

Wang Fenghai, chief executive of the Shanghai Futures Exchange (ShFE), said on the Fastmarkets Copper Seminar the INE only uses delivery warehouses in Shanghai free trade zone for its bonded copper futures.

“As the market develops and as the needs grow we will expand outside of Shanghai and we are also studying the feasibility of having warehousing outside of China,” he said through a translator, adding such storage would likely be in the Asia-Pacific region where most INE market participants are.

“If needed, we can go to other regions,” he added.

Unlike the ShFE copper contract, INE bonded copper futures, which were launched in November, are open to international investors looking to hedge their exposure to China, the world’s biggest copper consumer. INE prices exclude tax as delivery is into bonded warehouses.

Asked if the INE would consider launching other metal futures, Wang said the exchange was studying aluminum but noted that China, by far the world’s largest aluminum producer, did not import a large volume of that metal.

“We are doing research but we have no plan of launching it yet,” he said.

Meanwhile, the INE and ShFE on Friday both said they had approved Wanbao Mining’s copper cathodes from its Letpadaung project in Myanmar as a deliverable brand, with a registered annual production capacity of 100,000 tonnes.

Beijing-based Wanbao’s cathodes from Myanmar were already deliverable on the London Metal Exchange.

(By Tom Daly; Editing by Kirsten Donovan and Richard Chang)


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