China’s bid to influence the prices of metals

CHINA is moving closer to challenging the London Metal Exchange in setting prices for metals globally after lining up metal storage warehouses outside China.According to a report by Reuters, by setting up the warehouses China will be able to have metals stored for delivery against futures trading on its newly launched Shanghai Futures Exchange (ShFE).If successful, the push would help give Shanghai’s contracts benchmark status, said Reuters. This would eliminate the need for Chinese firms to link their physical contracts to LME prices and create a need for foreigners to trade on ShFE to influence reference prices in their contracts, shifting market sway from the west to China.“Only through opening up can we draw in foreign investors, participate in the process of ShFE’s price establishment, therefore enhance price influence,” said Wang Fenghai, general manager at ShFE in June.“They (ShFE) have a plan, they are coming out, they will list warehouses outside China, … the government wants this to happen,” one source familiar with the exchange’s thinking told the newswire.While the metals industry has known since last year that ShFE plans to line up warehouses offshore, starting in Singapore, its latest comments to foreign firms suggest it is closer than ever to going ahead.“A real price people want to use needs warehouse stocks the world over,” a source at a consultancy with knowledge of ShFE’s plans said.Once ShFE makes a firm decision to offer metal storage outside China, the process of registering warehouses would be a matter of weeks if not days, as facilities already exist at ports that see large flows of metals, warehousing sources said.However, it may prove difficult to China to realise its goal, said Reuters as there are many obstacles ahead.“Any exchange that wants to achieve internationalisation would face challenges … ShFE would face many challenges and various constraints if it aims to become a global pricing center,” Luo Xufeng, chairman of Nanhua Futures told Reuters.The post China’s bid to influence the prices of metals appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com