China's First Rubber Futures Open to Foreigners Gain on Debut
Zhang Yuanke
/SOURCE : yicai
China's First Rubber Futures Open to Foreigners Gain on Debut

(Yicai Global) Aug. 12 -- China, the world's biggest consumer of natural rubber, started trading its first rubber futures open to overseas investors, aiming to have more sway over international pricing of the raw material used in automobile tires.

The Shanghai International Energy Exchange listed six TSR 20 contracts at CNY9,260 (USD1,311) a ton, whereas the international benchmark stood at USD1,320 a ton.

The contract for February 2020 delivery gained 6.1 percent to CNY9,820, after earlier jumping as much as 9.9 percent. A limit of 14 percent was set for price changes today. That halves to 7 percent from tomorrow.

China, the world's biggest car market, consumed 40 percent of the 13.8 million tons of rubber used globally last year. TSR 20 contracts, dominated by the Singapore Commodity Exchange, accounted for 60 percent of the global total. The Tokyo Commodity Exchange, Thailand Futures Exchange and India's National Commodity & Derivatives Exchange have also unveiled rubber futures.

The Shanghai International Energy Exchange should make its TSR 20 the benchmark for international rubber and promote the supply-side reform of China's rubber industry, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, told Yicai Global at the listing ceremony.

TSR 20 is an important trade product for China, Thailand, Indonesia, and Malaysia, while the domestic natural rubber futures market has experienced more than 20 years of development with a growing influence over pricing, Fang added. 

China has already launched three futures that foreigners are permitted to trade – for crude oil, iron ore, and purified terephthalic acid -- to widen the domestic commodities market and compete against global benchmarks. 

Editor: Emmi Laine

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Keywords: Shanghai Futures Exchange