China Captures Top Growth in Commodity Trading After 2015 Rout

  • Dalian overtakes SHFE as soymeal, iron-ore trading surges
  • Commodity futures were most-traded derivatives last year: WFE

China’s commodities exchanges got a boost from last year’s rout in raw-material prices as investors piled into bets on everything from steel and soybean meal to iron ore.

Trading in commodities on the Dalian Commodity Exchange and the Shanghai Futures Exchange surged to more than 1 billion contracts last year, according to the World Federation of Exchanges. Trading in Dalian climbed 45 percent last year as the Shanghai transactions rose 25 percent in 2015, the group said in a report released Monday.

The center of the commodities world is shifting east as the growth in volume on the commodity bourses in China, the biggest consumer and user of raw materials, has dwarfed that of rivals such as the London Metal Exchange in recent years. Trading gathered pace last year as speculators from retail investors to local hedge funds piled into the markets. Slowing growth in the top consumer and supply gluts sent raw materials tumbling, with the Bloomberg Commodity Index, a measure of investor returns from 22 raw materials, plunging to a seven-year low in 2015.

Trading in commodities in the Asia Pacific region surged 55 percent last year, compared with 9 percent in 2014 and 16 percent 12 months earlier, according to data from the WFE.

That compares with a 17 percent increase on CME Group and a 4 percent decline on the London Metal Exchange last year. A total 4.3 billion commodity-derivatives contracts changed hands globally, 26 percent more than in 2014.

The Dalian Commodity Exchange overtook the Shanghai Futures Exchange as the world’s biggest market for raw materials by the number of contracts as trading in iron ore more than doubled and soybean meal rallied 41 percent, the WFE said.

Value Traded

A slump in oil prices helped drive trading on ICE Futures Europe and CME Group Inc., home to the two largest energy contracts. Volatility on the Bloomberg Commodity Index reached a three-year high in August last year.

The value of traded contracts on the Dalian and Shanghai bourses was still smaller than that of CME Group or the LME. CME Group was the largest commodity derivatives exchanges by the value, with $41.15 trillion changing hands in 2015.

The London-based WFE, which represents more than 200 exchanges, clearing houses and other market-infrastructure providers, surveyed 47 members. A total of 23.4 billion derivatives contracts were traded last year, up 12 percent from a year earlier. Commodity-derivatives trading grew 26 percent to 4.3 billion contracts with futures becoming the most actively traded contracts, according to the WFE data.

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