World's first physical delivery aluminum oxide futures begin trading in Shanghai

The world's first physical delivery aluminum oxide futures officially began trading on the Shanghai Futures Exchange (SHFE) on Monday morning.

Zhang Bo, from the Futures Regulatory Department of the China Securities Regulatory Commission, read the CSRC's approval document for the SHFE's registration of aluminum oxide futures.

According to Tian Xiangyang, SHFE chairman, the listing of aluminum oxide futures will help promote the effective connection and smooth circulation between the futures and spot markets, improve resource allocation efficiency, better coordinate aluminum oxide resources in the domestic and international markets, and further enhance the resilience and security level of China's aluminum industry supply chain.

It is also expected to help improve the market-oriented pricing mechanism, accelerate the formation of an open, fair, and just market price, as well as assist in industrial structural adjustment through market-oriented means. Additionally, it will further enrich risk management tools for aluminum industry chain enterprises and help them effectively manage risks and allocate resources efficiently, Tian said.

Data showed that China is the world's largest producer and consumer of aluminum oxide, with a production volume of 81.86 million tons in 2022, accounting for more than half of the global total.

On the first day of trading for aluminum oxide futures on the SHFE, the eight futures contracts, namely AO2311, AO2312, AO2401, AO2402, AO2403, AO2404, AO2405, and AO2406, were listed for trading with a benchmark price of 2,665 yuan (US$372.46) per ton.

The main contract AO2311 opened at 2,730 yuan per ton and closed at 2,721 yuan per ton, up 56 yuan per ton or 2.10 percent from the benchmark price.

The total trading volume for the day was 100,700 lots (one-way), with a turnover of 5.462 billion yuan and open interest of 14,700 lots.

Representatives from the CSRC, the Shanghai administration, relevant industry associations, upstream and downstream enterprises of the aluminum oxide industry chain, SHFE member units, delivery warehouses, quality inspection agencies, market institutions, and news media witnessed the listing event.