Singapore 27/04/2016 - The Shanghai Futures Exchange (SHFE) has introduced another measure to curb trading volatility in its ferrous metals contracts, this time by cutting its night trading hours for its rebar and hot rolled coil contracts by two hours starting May 3.
The new night trading hours for the contracts will be shortened to Monday-Friday 9pm-11pm Shanghai time, from the current hours of Monday-Friday 9pm-1am (next day) Shanghai time, according to SHFE’s notice on Tuesday.
SHFE said the adjustment is “in response to feedback from clients and to bring the trading hours of the contracts closer to those of related domestic futures contract to facilitate risk management in the industry chain.”
The latest change follows its announcement last Thursday that it would raise transaction fees for the two contracts effective April 25 – the move seen as a way to raise the barrier of entry to the contracts.
SHFE is looking to cool frantic speculation in its steel contracts, particularly rebar, after investors - betting on an improving domestic steel sector alongside Chinese economy - sent its rebar trading volume and prices spiking to hit trading limits on consecutive days last week.
A total of 91.62 million lots of rebar contracts on the exchange changed hands last week, up from 73.28 million lots on the previous week. Some 23-24 million lots changed hands each day over April 21-22.
The most active rebar contract price had risen around 70 percent since November last year, with the October contract closing at 2,782 yuan per tonne on April 21, its highest since September 2014.
Some market participants had wondered if SHFE’s rule changes for its ferrous suite were likely to be extended to its non-ferrous metal complex as some its non-ferrous metal contracts like aluminium and zinc too rallied to hit trading limits last week.
But most industry watchers polled by FastMarkets reckoned SHFE’s non-ferrous metal contracts were unlikely to face the same limitations as the steel contracts because trading volume and price increases for the nonferrous metal futures were still considered normal relative to those of the rebar contracts.
The SHFE's non-ferrous suite attracts speculators but not to the extent of its rebar contracts, which also attract many retail investors, market participants said.
Its rebar futures were the most traded metals futures globally last year when 541 million lots changed hands, up 32.6 percent from the previous year, according to the Futures Industry Association (FIA).