armstrongeconomics.com / By Martin Armstrong / January 21, 2013
A report in China Daily said that Shanghai wants to transform itself into a global commodities trading center. Indeed, the Shanghai Futures Exchange has already introduced several new products, including a silver futures contract, and is working on a crude oil futures platform. The paper said the Exchange is about to begin test trading of the oil system. This comes as Hong Kong Exchanges and Clearing (HKEx) awaits regulator approval in Britain on its takeover of the London Metal Exchange. HKEx was recently described by China Daily as having “close ties with the regulators in Beijing.” Now Meishan Port south of Shanghai has begun discussions with the LME to be listed as a metals delivery port and operate as an LME-approved warehouse. China has until now banned foreign-owned metals warehouses but the Hong Kong takeover of the LME – plus the desire by Chinese companies to gain more control of storage – is seen as likely to ease the way for a policy change. China is likely to expand its influence and control into the commodity realm. Chinese ports, including Dalian and Shanghai, will most likely open LME warehouses.