On January 20, the Shanghai Municipal Office of Finance, in collaboration with the Shanghai Futures Exchange (SHFE), Shanghai Clearing House, and the Municipal Commission of Commerce, jointly held a press conference to introduce the "Action Plan for Strengthening Futures-Spot Linkage and Enhancing the Tier of Nonferrous Metal Commodities" (hereinafter referred to as the "Action Plan").
The Action Plan primarily consists of three parts encompassing 18 specific measures, aiming to strengthen the linkage between futures and spot markets and enhance Shanghai's nonferrous metal commodity tier and global pricing influence.
The Action Plan proposes to elevate the internationalization level of nonferrous metal commodity futures and spot markets, thereby enhancing the influence of the "Shanghai Price."
Wang Jun, Chief Expert at Green Dahua Futures, stated that the release of the Action Plan will effectively boost China's global market influence in nonferrous metals. Shanghai will transition from strategic planning into a systematic and coordinated implementation phase. Specifically, it will systematically strengthen the benchmark status of the "Shanghai Price," extending the futures market into the entire trade and risk management ecosystem. It will also enhance the internationalization level of China's nonferrous metals, greatly facilitating overseas entities in using Shanghai nonferrous metal futures contracts for hedging and physical delivery, significantly improving the convenience and attractiveness of the Shanghai market for international users, and laying a material foundation for gaining substantive pricing power. Furthermore, through the development of financial infrastructure and rules, it will enhance the market's soft power, improving the efficiency of warehouse receipt financing and circulation centered on Shanghai, and attracting global goods and market funds, which are the credit and logistics pillars behind a nonferrous metal pricing center.
The Action Plan specifies the expansion of high-level institutional openness in the Shanghai nonferrous metal futures market, promoting the inclusion of eligible varieties into the scope of specific varieties open to foreign participation.
A relevant responsible person from the Jinyuan Futures Research Institute indicated that by expanding openness through high-level institutions and attracting diverse participants such as overseas mines, traders, and investment institutions, the "Shanghai Price" can more fully reflect global supply and demand. This will gradually establish it as a pricing benchmark for Asia-Pacific and even global trade, allowing China to possess matching discourse power in the global pricing system, shifting from passively accepting prices to actively influencing them.
The Action Plan also requires actively exploring cross-border delivery and promoting the "going global" of delivery services. Under the premise of controllable risks, it aims to explore and implement the business model of "establishing warehouses overseas and conducting cross-border delivery."
Fan Rui, Head of the Metal Research Group at Guoyuan Futures, expressed that China is the world's largest producer of nonferrous metals like aluminum and zinc, yet its international influence remains limited. As nonferrous metal futures and options steadily expand their openness to foreign participation, it will help introduce a broader range of international industrial and financial participants, improve the domestic nonferrous metal pricing mechanism, and enhance the linkage between domestic and international prices, thereby further strengthening global pricing power. Overall, including more nonferrous metal futures and options in the scope of specific varieties open to foreign participation will more effectively utilize functions such as price discovery and hedging, with the essence being how to better enhance the level of service provided to实体enterprises.
The aforementioned responsible person from the Jinyuan Futures Research Institute added that the opening up of nonferrous metal futures and options is not merely a unilateral advance in the financial sector; it will generate powerful synergistic effects with Shanghai's other pricing centers. It is foreseeable that as the internationalization of the futures market deepens, a series of supporting reforms—such as cross-border RMB settlement, bonded delivery, and international storage and logistics—will attract nonferrous metal resources from the international market to gather in Shanghai and surrounding areas, forming a complete industrial ecosystem and truly realizing the strategic vision of "using finance to promote industry, with futures and spots linked."
Data from the Shanghai Futures Exchange shows that, to date, 11 nonferrous metal futures varieties, including copper, aluminum, zinc, and lead, and 10 nonferrous metal options varieties have been listed. Some futures varieties have already acquired pricing power globally or regionally.
Comments