Futures trading on Chinese commodities heats up

Shanghai

THE intensity of futures trading on Chinese commodities exchanges is making some of the world's most liquid markets look leisurely.

Trade in everything from steel reinforcement bars to cotton has soared in the world's biggest consumer of raw materials, echoing how speculators drove a stock market rally last year before a rout that erased US$5 trillion. It has prompted exchanges in Shanghai, Dalian and Zhengzhou to boost fees or issue warnings to investors. Wu Zhili, an analyst from Shenhua Futures Co estimated that as much as 70 per cent of trading in Chinese iron ore and steel futures is retail investors speculating on price movements, as opposed to producers or consumers using contracts to hedge.