The remarkable growth of China’s economy is nothing compared to that of the Shanghai Futures Exchange. But as Colin Packham discovers, size is not everything when it comes to setting world prices for metals – you need a widely accessible market too.
If you use steel derivatives, it’s unlikely that you have executed your trades at the world’s leading steel futures market, the Shanghai Futures Exchange. That is, unless you’re Chinese.
The market remains closed to foreign participants, unless they have a base in China.
That did not stop Shanghai leaping to the top of the world steel futures league table almost as soon as it listed its Steel Rebar Future in March 2009. This was probably the most successful launch ever of an exchange-traded derivative. By October, it was turning over 1.89m contracts a day, making it the world’s third busiest future or option.