RPT-COLUMN-China’s commodity trading crackdown has long-term consequences – by Clyde Russell (Reuters U.S. – December 7, 2016)


Dec 7 Is there a longer-term cost to be paid by China for its ongoing efforts to curb what the authorities in Beijing see as unjustified price spikes in commodity prices on the country’s futures exchanges?

Certainly it is becoming clear that the authorities are continuing to ramp up their campaign against the so-called hot money pumping up commodity prices, with new measures designed to cool price action in iron ore, steel and coal among others.

In recent weeks the Dalian and Zhengzhou commodity exchanges and the Shanghai Futures Exchange have all toughened trading requirements several times. The measures imposed include raising trading margins, hiking transaction fees and imposing trading limits.

For example, the Dalian Commodity Exchange (DCE) lifted the trading margin for its coking coal and coke contracts three times within the space of week, ultimately taking it to 15 percent effective from Nov. 11.

These measures are designed to cool speculative flows into commodity futures as Beijing becomes increasingly concerned about price spikes and the potential for bubbles in futures markets impacting on the real-world economy.

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