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Chinese Demand For Gold, Silver Exploded In 2013 - FIA

By Kitco News
Monday March 10, 2014 8:26 PM

(Kitco News) - The biggest growth in trading activity of gold future contracts in the last five years has come from China, according to the latest information from the Futures Industry Association.

Monday evening the FIA released its annual report on global trends in the trading of futures and options; Gold futures on the Shanghai Futures Exchange saw the biggest increase volume in the last five years as 20.09 million contracts were traded in 2013, an increase of 416% from the 3.9 million contracts traded in 2008.

As a comparison, in North American, Comex gold options traded on the New York Mercantile Exchange came in sixth place in volume growth over the last five years with 10.69 million contracts traded in 2013, an increase of 141% from 2008 when there were 4.39 million contracts.

“China’s commodity futures markets have been growing extremely rapidly in recent years, but 2013 stands out for the large number of new contracts that entered the markets,” the report said.

The association said that one of the reasons for the growth in the Chinese gold contracts was the introduction of “overnight trading,” which allowed domestic investors to trading during European and North American hours.

Also in the the precious metals complex, the association said that 15 kilogram silver contracts traded on the Shanghai exchange were a major winner as its popularity “exploded over the last year."

“Silver futures, which were listed on the SHFE in May 2012, traded 21.26 million contracts in its first year, then-jumped to 173.22 million in 2013,” the report said.

However, Shanghai silver futures actually came in second place in the overall metals complex.

Coming in first place were 10 metric tons Steel Rebar Futures contracts on the Shanghai exchange, with 293.73 million contracts traded in 2013, an increase of 62.7% from 2012.

“This contract, which was launched in April 2009, has emerged as the world’s leading futures on steel, and reflects the emergence of commodity futures markets in China as key barometers for economic growth,” the FIA said in its report.

For the gold market, options of SPDR Gold Shares Exchange-Traded Fund (NYSE: GLD), which are listed on multiple exchanges, were the most active for the yellow metal with more than 49 million contracts traded in 2013, a decrease of 10% from 2012.

In total, GLD options ranked fifth in the overall metals complex.  

Rounding out the top five in the metals complex were five ton copper futures traded on the Shanghai exchange coming in third place with 64.3 million contracts traded in 2013, up 12.2% from last year; 25 ton high grade primary aluminum futures traded on the London Metals exchange came in fourth place with 63.8 million contracts traded in 2013, an increase of 7.9% from 2012.

Comex 100 troy ounce gold futures came in sixth place overall with 47.29 million contracts traded in 2013, an increase of 7.7% from the previous year.

Looking at the overall futures market, The FIA compiled statistics from 84 exchanges worldwide and said in its report that 21.64 billion futures and options contracts were traded in 2013, an increase of 2.1% from 2012; however, the association added that last year’s activity was still “well below the number of contracts traded in 2011 and 2010.”

The association said that CME Group remained the world’s largest derivatives exchange by volume, with 3.16 billion contracts traded in 2013.

In second place was IntercontinentalExchange, trading a total of 2.81 billion futures and options contracts. The FIA said ICE’s jump in the ranks was the result of its acquisition of NYSE Euronext and its subsidiary exchanges in Europe and the U.S.

By Neils Christensen of Kitco News; nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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