Futures Daily: The MoM of Futures Trading Volume Plunges, the Hedging Needs Necessary Mobility

Updated on: June 6, 2016

Reported by Que Yanmei, Journalist from Futures Daily

Some varieties of futures market have appeared the overheating phenomenon since March of this year, and some main Futures Exchanges have successively adopted some cooling measures. Taking Shanghai Futures Exchange(SHFE) as an example, except for the measures of cash deposit and service charge withdrawal, the journalist of Futures Daily also learned that, the restricted warehouse measure has been adopted on more than 50 accounts by the SHFE.

Currently, the trading volume of futures market is decreased obviously. The latest data shows that the, link relative of the trading volume of national futures market is decreased by 24.04% in May.

Lei Lianhua, analyst of Fubao Information, told the journalist from Futures Daily that, the decrease of trading volume of futures market showed that the speculation behaviors was cooling, before the release of these measures, the trading volume of some popular varieties in the market was decreased obviously, for example, the trading volume of rebar futures have decreased from 23.972 million lots (two sides) on April 21 to the current 4 million lots (two sides).

Gao Shang, Futures Research Executive of Haitong Securities, said on a press interview that, although the trading volume of commodity futures was decreased sharply, the decrease was not as sharp as that of futures index, thus there will be not no obvious influence on hedging.

An anonymous person of futures insider told the journalist that, the supervision measures adopted by the main Exchanges have bigger influence on process trading and speculative fund but small influence on hedging of spot goods enterprises. However, he also mentioned at the same time, because the service fee is rather high and the speculative fund of market is decreased, the enterprise hedging will also be influenced from the perspective of mobility.

He also said that, speculative fund is an important part of futures market and the bearer of market risk, thus to drive away the speculative fund would make the hedging fund to lose the opponent and cannot play the role of risk management, thus it is impossible for the futures market to serve the entity economy.

In his view, the current problem of futures market is not excess liquidity, but the insufficient mobility of many varieties, the depth and breadth of futures market is far less.

Taking the nonferrous enterprises as example, Miao Hongqiang, Deputy General Manager of Yuguang Group, told the journalist from Futures Daily that, their output of lead bullion in 2015 is 40,0000 tons and it is quite difficult for enterprise to realize the hedging trading volume of 2,000 tons on the targeted price.

Chang Zhenglong, Deputy General Manager of Yunnan Chi Hong Zn&Ge Co., Ltd. showed the same bewilderment. He said that the futures market should have certain mobility to guarantee the continuity and authenticity of futures price, thus the enterprise can effectively utilize the futures price for pricing in trading contract.

He showed that whether the enterprise can fully satisfied the hedging demand and realize the hedging goal is objectively depended on the matched mobility provided by futures market, thus the futures market to serve the entity economic development can play its role.

It is known that the domestic refined lead output is 3.858 million tons in 2015 and the daily average inventory and trading volume of lead futures are separately 16,100 lots (one side) and 5,400 lots (one side), which is only 2.1% and 0.7% of lead output, it is obviously cannot satisfy the pricing and avoiding risk demand of lead industry chain enterprises