(Yicai Global) June 5 -- The Shanghai Futures Exchange has received regulatory approval to launch the world’s first alumina futures with physical delivery.

“We will listen to the opinions and suggestions of all parties, rationally design contracts and trading rules, optimize the layout of delivery warehouses, and prudently promote the listing of alumina futures,” the SHFE said on June 2, after receiving approval from the China Securities Regulatory Commission.

China is the world’s largest producer and consumer of alumina, with an output of nearly 81.9 million tons last year, accounting for more than half of the global total. The size of China’s alumina market is estimated at more than CNY200 billion (USD28.2 billion), based on last year’s average price.

The listing of alumina futures will make full use of the market-oriented pricing mechanism to promote the transformation, upgrading, and high-quality development of the aluminum industry, give full play to the decisive role of the market in resource allocation, enhance the competitiveness and pricing power of the alumina product made in China, and strengthen the risk management of local industry players, insiders told Yicai Global.

Ninety-five percent of alumina is used in the production of electrolytic aluminum, with the rest used in the ceramics, chemicals, and pharmaceutical industries. Alumina is made from bauxite.

Editors: Tang Shihua, Futura Costaglione