Sparkling debut for lead futures
By Richard Fu |
March 25, 2011, Friday
|
Print Edition
Print Edition
SHANGHAI'S new lead futures debuted strongly in trading yesterday, and became the fourth base metals contracts to be launched on the Shanghai Futures Exchange.
The most actively traded September lead contract ended 3.2 percent higher at 18,935 yuan (US$2,885) per ton after rising as much as 6.7 percent at one stage in heavy trading.
The local exchange set the lot size at 25 tons for lead, five times that of its existing metals contracts, in a move that could deter individual investors.
"This (larger contract size) could curb excessive speculation but still ensures liquidity," said Zeng Binglin, general manager of Zhuzhou Smelter Group Co, China's leading zinc and lead producer.
The first lead deal on the Shanghai bourse was done by Zhuzhou Smelter, which sold a contract at 19,230 yuan.
Generally lead prices represented a premium over zinc prices but zinc is now more expensive in China's spot market, according to the Shanghai Metals Market. On the London Metal Exchange, lead was quoted more than 10 percent higher than zinc.
That indicates further room for growth for Shanghai's lead contracts, the SMM said. The Shanghai exchange had set the base price for lead at 18,350 yuan a ton, even lower than zinc's closing price of 18,475 yuan on Wednesday. Shanghai zinc closed at 18,580 yuan yesterday.
The other metals traded on SMM are copper, aluminum and zinc. Lead is used in battery.
Using futures as a hedging tool, producers can sell their future production to lock in higher prices while consumers can buy future needs to reduce the risk of price fluctuations.
The most actively traded September lead contract ended 3.2 percent higher at 18,935 yuan (US$2,885) per ton after rising as much as 6.7 percent at one stage in heavy trading.
The local exchange set the lot size at 25 tons for lead, five times that of its existing metals contracts, in a move that could deter individual investors.
"This (larger contract size) could curb excessive speculation but still ensures liquidity," said Zeng Binglin, general manager of Zhuzhou Smelter Group Co, China's leading zinc and lead producer.
The first lead deal on the Shanghai bourse was done by Zhuzhou Smelter, which sold a contract at 19,230 yuan.
Generally lead prices represented a premium over zinc prices but zinc is now more expensive in China's spot market, according to the Shanghai Metals Market. On the London Metal Exchange, lead was quoted more than 10 percent higher than zinc.
That indicates further room for growth for Shanghai's lead contracts, the SMM said. The Shanghai exchange had set the base price for lead at 18,350 yuan a ton, even lower than zinc's closing price of 18,475 yuan on Wednesday. Shanghai zinc closed at 18,580 yuan yesterday.
The other metals traded on SMM are copper, aluminum and zinc. Lead is used in battery.
Using futures as a hedging tool, producers can sell their future production to lock in higher prices while consumers can buy future needs to reduce the risk of price fluctuations.
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