All change in the world of industrial metals trading? – by Andy Home (Reuters U.S. – July 12, 2016)

LONDON – China has loomed large over the world of industrial raw materials for many years. The prices of metals from aluminum to zinc have long swayed to the beat of the world’s largest manufacturing nation.

But this is the year that China has emerged from the limelight to take center-stage in the trading of those metals. On one day alone, March 10, trading volumes on the Dalian Exchange iron ore contract exceeded one billion tonnes, more than the combined annual output of the world’s biggest three producers, Rio Tinto, BHP Billiton and Brazil’s Vale.

The following month, on April 21, more than 240 million tonnes of steel rebar traded on the Shanghai Futures Exchange (ShFE), equivalent to around a third of China’s steel production last year, not just of construction-destined rebar but of every imaginable type of steel product.

Such was the crowd surge of Chinese retail investors through the domestic commodities trading space earlier this year. Trading conditions became so tumultuous that Chinese exchanges frantically upped margin and deposit levels to disperse the hordes.

Activity has since calmed down but no-one can be left in any doubt as to the seriousness of China’s ambitions to move from primary price-taker to primary price-setter across the industrial spectrum. Those ambitions obviously challenge the London Metal Exchange (LME), which has dominated base metals trading for the last century.

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