Shanghai exchange plans int’l copper contract for 2020

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    SHANGHAI/LONDON- The Shanghai International Energy Exchange (INE) plans to launch a copper contract next year that will open the door to foreign investors wanting to hedge exposure in China, the Shanghai Futures Exchange said on Monday.

    China is the top global consumer of raw materials and has some of the world’s most liquid commodities futures markets, but foreign companies have limited access to these markets.

    The Shanghai Futures Exchange (ShFE), which owns INE, currently offers a copper futures contract, but it is not open to foreign participation and is subject to value-added and import taxes.

    “The ShFE Copper contract in many ways is the regional benchmark in Southeast Asia.

    However, firms without onshore China representation were unable to hedge into the market,” said John Browning, managing director at Hong Kong-based broker BANDS Financial.

    “The INE copper contract … solves this problem. A marginal loss in hedging volume on the LME and CME might be offset by a huge increase in cross-border arbitrage.”

    The London Metal Exchange and CME Group CME.O offer investors and hedgers liquid copper contracts. – Reuters