China commodity exchanges act to contain virus-driven volatility

China’s commodity exchanges have rolled out a series of measures – from raising margin requirements and trading limits to halting trade completely – to help maintain market stability as coronavirus panic spreads across the globe.

Below is a list of some of the actions taken, affecting trade in everything from eggs to gold in the world’s biggest commodities consumer.

CRUDE OIL/RUBBER
– The Shanghai International Energy Exchange (INE), responding to a collapse in global oil prices, raised the trading margin on its crude oil futures contract to 11% from settlement on March 11, and hiked the trading limit to 10% from March 12.

– Last Tuesday, the INE said it would waive delivery fees for its crude oil and TSR 20 rubber futures from April 10 this year until Jan. 8, 2021 to ease financial pressure on market participants.

– The trading margin on TSR 20 rubber futures will be increased to 11% from 10% after settlement on March 23 and the trading limit raised to 9% from 8%, according to a notice on Thursday.

SHFE
– The Shanghai Futures Exchange (ShFE) said on March 13 it was raising trading margins and limits on a large number of commodity futures contracts starting this week, including base metals, steel rebar, hot-rolled steel coil and fuel oil.

– On Thursday, it said the trading margin for aluminum, zinc and lead futures contracts would be further raised to 10% from 8% after settlement on March 23, while the trading limit on those contracts will be increased to 8% from 6%.

– On Friday, the bourse said the trading margin for its copper contract would be further increased to 10% from 8% and the trading limit raised to 8% from 6%, effective immediately. The margin requirement and limit for tin have also been raised to 10% and 8%, respectively, ShFE said.

– Last Tuesday, the bourse had said it would also waive delivery fees for 16 products – including base metals, steel, gold, silver and fuel oil – from April 10 until Jan. 8, 2021

PRECIOUS METALS
– The Shanghai Gold Exchange (SGE) on March 16 said it would raise margin requirements and trading limits for gold and silver contracts after big price fluctuations.

– Last Tuesday, the bourse said it would impose a one-day halt on trading in its Ag (T+D) silver contract on March 18, after the contract fell 13%, and would take measures to reduce market risk.

– Silver trading on the SGE resumed on Thursday with the margin requirement raised to 19% from 14% and the trading limit increased to 18% from 13%, but the exchange said after the market closed the margin and limit would be lowered to 16% and 15%, respectively.

DCE
– The Dalian Commodity Exchange (DCE) said on March 4 it would raise trading limits and margins on its egg futures contracts for May and June delivery.

– It then raised transaction fees for the April and May egg contracts. (bit.ly/2QnykWT)

– The DCE said on Thursday it would raise the trading limit for styrene futures to 9% and margins to 11% from settlement on Mar.19.

– On Friday, the DCE said it would adjust the trading limits for its polyethylene and polypropylene futures contracts to 6%, while setting margin requirements to 7% from settlement on March 23.

– DCE also said it would change the daily limit and margin requirements of its ethylene glycol futures contract to 9% and 11% respectively.

– The Dalian exchange on Monday adjusted trading limits for iron ore, coking coal and coke futures contracts to 7% from 6% from March 25.

– The DCE also raised trading limits for palm oil and egg futures contracts to 6% from March 25.

ZCE
– China’s Zhengzhou Commodity Exchange (ZCE) raised margin requirement for PTA futures contracts from May to December deliveries to 7% from settlement on March 25.

– The ZCE also raised trading limits for PTA and Methanol futures contracts from April to December deliveries to 6% from March 26.

– The Zhengzhou exchange raised margin requirement for cotton futures contracts to 7%, trading limit to 6% from settlement on March 25.
Source: Reuters (Reporting by Min Zhang, Tom Daly, Emily Chow and Muyu Xu; editing by Raju Gopalakrishnan, Susan Fenton)