Yangshan positions itself as commodities trading hub

The nation's first physical price for a commodity that sits in a bonded area debuted in the Yangshan deep-water port of Shanghai on Wednesday, on the same day as its first product, the "Yangshan copper premium", was listed on third-party data platforms.

Experts said the developments may help domestic commodity traders vie for a bigger say in global pricing decisions.

The Yangshan copper premium - which is paid on top of the benchmark London Metal Exchange cash copper price - is the first of a series of commodity prices to be launched under the "Yangshan Price" banner, which are being designed by the Shanghai Free Trade Zones to develop the Yangshan bonded area into a bulk commodity trading platform.

As China's first physical price for non-ferrous metal in bonded areas, the Yangshan copper premium will be published on authoritative and independent platforms including Bloomberg and Xinhua 08, the financial information service of the Xinhua News Agency, a source from the port said.

Up to 63 leading commodity enterprises have established divisions in Yangshan port, with a combined registered capital of 3.5 billion yuan ($563 million), laying a solid foundation for the port to develop broader futures delivery businesses, said Wang Xinling, the deputy director of the management committee of Shanghai Free Trade Zones.

These commodities enterprises cover the banking, trading, logisticsand manufacturing industries, Wang added.

"The launch of the Yangshan Price will create closer links between the domestic and international market, and help Chinese bulk commodities enterprises gain more of a say in international pricing," said Chen Quanxun, chairman of the China Nonferrous Metals Industry Association and state counselor.

Fan Xin, president of Shanghai Metals Market website, a leading metals information provider, said: "The release of the Yangshan copper premium is backed by the rapid growth in copper imports and exports via Yangshan port, as well as huge inventories in the port."

According to Fan, the Yangshan copper premium will be worked out by an independent third party, combining data collected through telephone purchases and trade matching.

China consumed 8.84 million tons of coppers in 2012, 43 percent of global consumption, more than half of which was imported.

Around $10 billion worth of electrolytic copper was imported through the Shanghai Free Trade Zones in 2012, accounting for a third of the nation's total imports, Yangshan port data showed.

The Yangshan Price will not only reflect copper supply and demand, but also guarantee its role of serving as an important reference price in copper trading.

It is expected the Yangshan Price will become a benchmark with international influence on copper trading in future, said Wang.

Shanghai will add 80,000 to 90,000 square meters of storage capacity for metals by the middle of this year to the existing 50,000 sq m, according to a Bloomberg report in January.