At the ITRI China International Tin Forum in Shanghai last week speakers from the Shanghai Futures Exchange (SHFE) and Indonesia Commodity and Derivatives Exchange (ICDX), Asia’s two “new” tin exchanges, described recent and planned developments, including an expansion of listed brands and delivery points underpinning futures trading in China and the introduction of a “bulletin trade” system enabling one-to-one physical trades in Indonesia.
The launch of nickel and tin contracts by SHFE from 27 March this year has given the Shanghai exchange a matching set of base metals contracts with the LME. Base metals accounted for a third of SHFE turnover by value in 2014. At the launch nine monthly tin contracts running from July 2015 to March 2016 were open, with most activity in the nearby July contract, which will be due for delivery from 15 July. Four brands from major domestic producers (Yunnan Tin, China Tin, Yunnan Chengfeng and Gejiu Kaimen) are currently listed, with more local and foreign brands in line to be added. There are currently six appointed warehouses for tin delivery, in Guangdong, Shanghai and Jiangshu, with an expansion of locations, especially in Northern China, planned. 151,834 one tonne lots of tin were traded in the first month, with a record daily volume (since surpassed in May) of over 32,000 lots on 28 April. Volumes are expected to continue to grow as the new contract becomes more widely accepted, with a further boost likely to be given to both tin and nickel as they are includes in the SHFE non-ferrous metals index after six months.
Over 100,000 tonnes of physical tin with a value of over US$2 billion has now been traded on the ICDX over the 20 months since five current contracts were launched at the end of August 2013. However tin is a very small part of ICDX activity, accounting for only 1% of total turnover on an exchange where the main business is in gold, palm oil and foreign exchange. Most activity to date has been through the exchange’s core auction system, but one-to-one “bonafide” trades have been permitted between particular eligible sellers and buyers through most of the recent history. From 1 May all 24 tin seller members have also been able to offer their TINPB300 brands to individual buyers at a minimum premium of US$200 to the auction price that day. In another move to boost membership, ICDX is also offering low cost non-transferable memberships, only for its tin contracts. There are currently 7 more companies in process to join the list of tin sellers, while 21 buyer members may soon be joined by 4 more, including China Minmetals.
