Chinese exchange planning to list coke futures this year

At the "2010 Northeast Asia Summer Coal Trade Conference" held yesterday, president of the Dalian Commodity Exchange (DCE) Liu Xingqiang said that the DCE is planning to list coke futures this year in order to providing coking coal businesses, coke businesses, steel factories and traders with a new hedging tool.

Mr. Liu said in his speech that in recent years, especially since the 2008 financial crisis, the coking coal market has undergone a period of severe volatility, which has had a large impact on the related industries, and the need for enterprises to transfer risk is great. Thus, the listing of coal futures will play an important role in ensuring the stable operation of the national economy.

The title of this year's coal trading conference is "Creating a New Model for Coal Trading", and it is being jointly held in Dalian from July 6th - 9th by the China Coal Industry Association, Liaoning provincial government and Dalian municipal people's government.

Liu Xingqiang said at the opening ceremony of the trade conference that the DCE has chosen to first list coke futures and will next focus on researching coking coal futures. Mr. Liu said that the listing of coke and coking coal futures will provide coking coal businesses, coke businesses, steel factories and traders with a new hedging tool.

It was reported at the conference that in recent years China is quickly moving from its traditional status as a net coal exporter to a major coal importer and is becoming more and more connected with the international market.

In 2009, China's net imports of coal exceeded 100 million tons, of which coking coal accounted for 34.49 million tons, an increase of 403% over 2008. At the same time, the conflict between supply and demand in the domestic coal market is becoming increasingly obvious: for a long time, the domestic coal market has operated under the mechanisms of a planned economy, which has resulted in low efficiency, imperfect pricing mechanisms, and a slow pace of marketization.

These problems have directly influenced the formation of a domestic coal market structure and a comprehensive trading pattern. In early 2009, the National Development and Reform Commission, together with the State Council Development Research Center drafted the "China Coal Market System Construction Plan and Policy Research" document, which clearly stipulated a "plan to reconstruct China's coal market system within three to five years, and to start and operate a national coal trading center by the end of 2010." Both the domestic and international markets are calling out for a new pattern of coal trading.

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