Hong Kong Exchange launches Futures Contracts in Nickel and Tin

By Anil Mathews (ScrapMonster Author)

December 16, 2015 05:48:18 AM

BEIJING (Scrap Monster): The Hong Kong Exchange (HKEx) has launched new futures contracts in Nickel and Tin. It has also launched a mini-Lead contract. The launch of the contracts took place on the Exchange on December 7th, Monday.

The new contracts aimed at Chinese retail investors are denoted in Yuan, but will be based on London Metal Exchange (LME) settlement prices. The contract size of Nickel and Tin contracts would be 1 tonne and that of the mini-Lead contract would be five tonnes. Unlike LME contracts, these contracts would be settled monthly and will be settled only in cash. The exchange fees on the contracts will be waived-off until the end of June 2016, Exchange press release stated.

The launch of the new contracts comes after a year after the Exchange had first listed its commodity contracts in Copper, Aluminum and Zinc. Although these contracts garnered retail investor demand in the beginning, the trading volumes later dropped significantly.

This is the second tin futures contract to be launched during the year. Earlier in March this year, Shanghai Futures Exchange (SHFE) had launched new Tin and Nickel contracts, following regulatory approval from China Securities Regulatory Commission. The 1-tonne Tin contract has been a success so far. However, the trading volumes have continued to remain extremely thin.

One needs to wait and watch the performance of HKEx Tin futures contract, especially at a time when the commodity prices are at historic lows. The future contracts are most likely to report thin trading volumes as in the case of SHFE contract.