The Shanghai Futures Exchange (SHFE) will lower margin requirements and trading limits for base metals, stainless steel and silver from April 6, it said on Tuesday, in a move analysts said would improve trading liquidity, in particular for nickel.
Margin requirements for nickel will be lowered to 12% from 19% after the close of trading on April 6, according to the exchange, which also tightened daily movement limits in nickel and other metals in a move to lessen volatility.
"The lowered margin will attract more participation and
improve trading activity, so that the contract prices can better
reflect the market supply and demand picture," said Zhang Yuan,
a Shanghai-based metals analyst at CITIC Futures, referring to
nickel.
Global nickel futures trading has been significantly hampered in the aftermath of unprecedented price volatility in March 2022, when the benchmark nickel contract on the London Metal Exchange (LME) doubled within hours to over $100,000 per tonne.
The crisis damaged market confidence and traders'
willingness to participate in trading on both the LME and SHFE.
The most-traded SHFE nickel contract saw volumes fall 81% last year. Trading volume in the first quarter in 2023 is also down 39% compared with the same period a year ago, according to Refinitiv data.
The London Metal Exchange (LME) last week launched sweeping measures to revive its flagging nickel contract, including plans to cut waiting times and scrap fees for new brands of the metal that can be delivered against its contract. The most-traded SHFE nickel contract ended day trading on Tuesday 0.8% lower at 176,860 yuan ($25,702.29) a tonne, while the benchmark LME price gained 0.8% at $23,575 a tonne as of 1042 GMT.
SHFE also said margin requirements for copper and aluminium will be lowered from 12% to 9% and those for zinc and lead will ease from 14% to 9%, according to the exchange. The exchange will also move margin requirements for stainless steel from 14% to 10%, and from 12% to 11% for silver.
It tightened the upper and lower daily trading movement
limits for nickel to 10% from 17% previously, while limits for
copper and aluminium were narrowed to 7% from 10%, and for zinc
and lead to 7% from 12%.
($1 = 6.8811 Chinese yuan renminbi)
(Reporting by Albee Zhang, Siyi Liu and Dominique Patton,
Editing by Louise Heavens, Tony Munroe, Alexandra Hudson)
