Topping the Charts: Chinese Commodity Market Shows Impressive Jump in Volume YOY

If you’ve turned on the TV in recent weeks, then chances are you came across coverage of the Winter Olympics in Beijing, China. The games gathered a lot of attention with an ice-skating scandal, bobsledding, and a new fan favorite, ice curling?

But winter sports aren’t the only hot commodity coming out of China right now.

FIA recently released its statistics on the number of futures and options traded on exchanges worldwide in 2021, marking the fourth consecutive year of record-setting trading activity. To say that China is experiencing record-breaking growth is an understatement; just take a look at the impressive jump in volume year-over-year:

Two years ago, we reported that the Chinese volume growth entered into a new category; the 1billion contract club. But do you know what’s better than 1 billion? 2 billion! Here are a few of the 2021 highlights from the report that caught our eye:

  • The three main Mainland China futures/commodity exchanges saw growth of +52%, +17%, and +7% in their volumes in 2021.
  • One of the exchanges broke into the Two Billion Contract club…. The two others were already there.
  • The combined volume on the three Chinese exchanges was significantly in 2021 than those of some more well-known names like ICE, Eurex, and the CBOE.

China is a major player in the global commodities markets, making it one of the largest consumers and producers of various raw materials, agricultural products, and miscellaneous commodities. Let’s take a deeper dive into a few of these categories that are driving this increase in volume growth:

Agriculture
Agriculture products (we’re talking Corn, Soybeans, etc.) are taking the gold medal for playing a significant role in the YOY growth. Chinese products accounted for 58% (23 out of 40) of the Agricultural Futures and Options Contracts in terms of volume in 2021.

Metals
Metals contracts from Chinese exchanges again ruled the volume tables – with Aluminum Options (Shanghai Futures Exchange) and Bonded Copper (Shanghai International Energy Exchange) saw explosive improvements with 700%+ increases. Elements like Steel Rebar, Silver, Hot Rolled Coil Futures, Iron Ore Futures, Nickel, Aluminum, Ferrosilicon (SF), and Silicon Manganese (SM) Futures placed in 8 of the top 10 rankings on Chinese exchanges like the Shanghai Futures Exchange, Dalian Commodity Exchange, and the Zhengzhou Commodity Exchange.


Miscellaneous
One man’s soda ash is another man’s silver? Wait, that’s not exactly how that saying goes, but it is sort of how this category is set up. In these “miscellaneous” non-segmented groups, Chinese exchanges thrive. These same exchanges placed in 16 of the top 25 volume traded products with futures like PTA, Methanol, Soda Ash, Polypropylene, and Flat Glass placing high on the chart in the volume producing contracts.

So, as we are approaching the two-year anniversary of this global pandemic, it is clear that growth in the commodities market hasn’t been impacted, especially within the Chinese market. How can you capitalize on this? Well, RCM has had its feet on the ground in mainland China since 2017, making impactful connections and building a global vision with Chinese brokerages, exchanges, and asset management firms that utilize this market. Take advantage of the opportunities that await and schedule a personal call with us today!

Interested in more information? Contact RCM’s Director and China Consultant, Matthew Bradbard at mbradbard@rcmam.com or 312-870-1653. For the latest China updates, follow Matthew on LinkedIn and Twitter.

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