SHFE to roll out new futures products

Shanghai Futures Exchange will speed up the rollout of new futures products for casting aluminum alloy, liquefied natural gas, offset paper and corrugated paper as part of its efforts to better serve the real economy, its chairman Tian Xiangyang said.

The SHFE will also advance efforts to make nickel futures, among others, accessible to international investors, Tian said at the two-day 2025 Shanghai Derivatives Market Forum on Thursday.

Apart from the yuan-denominated crude oil futures launched in 2018, marking China's first futures product directly accessible to international investors, the SHFE has introduced five other internationally traded futures and options products over the past few years, including copper and low-sulfur fuel oil.

Meanwhile, the SHFE will accelerate efforts to launch portfolio margin and new trading orders so that the exchange's mechanisms are better aligned with international best practices while addressing China's own development needs, said Tian.

Over the past few years, Chinese companies have expressed rising demand for financial tools to guard against market risks as the international trade order is undergoing a restructuring and as geopolitical tensions rise, said Wang Ying, deputy head of the department of futures supervision at the China Securities Regulatory Commission.

Meanwhile, China is at a pivotal moment when old economic drivers are transforming into new ones. This requires the futures market to play a bigger role, and deepen its ties with the spot market. Capital, resources and goods should be directed to areas generating higher yields, she said.

To promote an intensive and high-quality development of industries, the mismatch of resources should be addressed. Pricing signals should also truly reflect market performance so that companies can be better guided to manage their production and sales. Efforts can be made to lower trading costs and help companies secure profits while better managing risks, added Wang.

Zhou Xiaoquan, executive deputy director of the Shanghai Municipal Bureau of Finance, said at the forum that the city will enrich the supply of commodity and futures products to empower the development of new quality productive forces. A complete derivatives product system can facilitate the real economy in terms economic capacity, he said.

The financial futures market should also address the needs of the real economy, said He Qingwen, chairman of the China Financial Futures Exchange. Financial futures should shoulder the responsibilities of stabilizing and invigorating the market at the same time, He added.

Data from the public domain show that about 1,450 A-share companies have released their hedging strategies for 2024. Among these, 457 companies used commodities for hedging, up 254 percent from that in 2018.

This reflects listed companies' increased participation in futures trading, or derivatives trading overall, according to SHFE experts.

The futures market has become an important tool for public companies to manage risks amid rising challenges globally, they said.

The number of industrial clients trading in shipping index futures on the SHFE jumped 17 percent year-on-year in the first 10 months of 2024. These clients' holdings of the product increased by 40 percent year-on-year in October. Companies have increasingly used futures to offset their losses in the spot market, according to the SHFE.