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Futures exchange to hold trials for zinc trading

(AP)
Updated: 2007-03-19 14:18

The Shanghai Futures Exchange will hold a test run for zinc trading this week as part of plans to launch futures trading in the metal, the exchange said Monday.

The move is meant to give zinc traders a hedging tool and to reduce their dependence on world markets, state media said.

Zinc futures and options are now traded only on the London Metals Exchange, where zinc prices rose more than 120 percent last year. As for many other commodities, China has been seeking a greater say in pricing given its huge demand.

China is the world's biggest producer and consumer of zinc, a metal used in galvanized sheets and in lead-zinc batteries. Zinc also is used as an alloy with copper, to make brass, and with magnesium and aluminum.

An announcement from the exchange said the trial trading would begin Monday afternoon and run through Friday.

The Shanghai Futures Exchange set the minimum delivery unit for zinc futures at 25 tons, with prices allowed to fluctuate in a single day by 4 percent above or below the closing price of the previous day.

The exchange currently also trades copper and aluminum.

China produces 20 percent of the world's total zinc output. In the first nine months of 2006 the country consumed 2.5 million tons of the metal, up 11 percent over the same period a year before.