The dawn of 2025 marks a significant development in Shanghai's futures market, as the Shanghai Futures Exchange (SHFE) has launched the "Strong Source Assisting Enterprises - 2025 Industry Services at SHFE" initiativeThis program aims to elevate the participation of industries in the futures market, thereby enhancing the quality of service provided to the real economy in its quest for sustainable growthThe SHFE is taking decisive steps to address the evolving challenges faced by businesses in their operations, thus facilitating a broader engagement with futures trading.

Throughout 2024, the SHFE undertook extensive research involving industry leaders from an impressive roster of 287 companies, including notable names such as ShaGang Group, Jinchuan Group, and China National Petroleum CorporationThis thorough investigation sought to uncover the barriers hindering industrial clients from fully embracing the futures market

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The SHFE has since committed to a series of strategic measures ensuring an optimized operational framework, the introduction of innovative product offerings, and improved participation convenienceThe main objective is to transform real enterprises into the primary beneficiaries of preferential policies and innovative services.

During this research, fascinating data came to lightNotably, the registration volume for standard warehouse receipts of rebar and hot-rolled coils soared to the highest level observed in the last five yearsMeanwhile, the registration for stainless steel futures also reached an all-time high since its inceptionThese statistics highlight a growing demand for price risk management among industrial players undergoing transformation and upgrades in their operationsThey also reflect the ongoing enhancements made to steel futures services, ensuring that stakeholders can better navigate the volatile marketplace.

The commitment to high-quality development in the steel futures sector has been a prominent focus for the SHFE since 2024. By actively monitoring the trends within the steel industry, the exchange has been able to adapt its offerings accordingly

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The expansion of delivery warehouses and resources, as well as improvements in delivery regulations, have all been integral to simplifying market engagement for steel companiesFor example, the establishment of the first steel delivery warehouse in the northwestern region of China has opened up nearly 90 million tons of regional steel production to futures market participationThis not only provides opportunities for local producers but also helps address supply and demand imbalances within the sector.

In 2024, the SHFE significantly increased its acceptance in the market by adding 14 new delivery warehouses and 37 storage pointsThis expansion included setting up group delivery facilities at major sites like Shandong Port and China National Petroleum, alongside the approval of an additional 38 registered and certified brandsThese efforts are instrumental in facilitating smoother trade circulation of futures delivery products nationwide, thereby contributing to the cohesive development of a unified national market.

Another pressing concern that businesses continue to face is the cost of participation in the futures market

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One large metal production company expressed the strain that high margin requirements impose on their financial resourcesUnderstanding that margins are critical for the safe and stable operation of the market, the SHFE is making strides to balance risk mitigation with cost reduction for businessesIn 2024, new mechanisms were implemented, including differential margin rates for hedging transactions and a substantial reduction of trading feesAdditionally, the SHFE has exempted warehouse fees for standard warehouse receipts as collateral, eliminated delivery fees for all physical delivery commodities (excluding gold), and transitioned to electronic invoicing for all but gold-related transactions.

These practical, ground-level innovations are not only reducing the costs that enterprises incur but also streamlining their processes, creating a more attractive environment for companies to engage with the futures market

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By the end of November 2024, the number of industrial clients participating in trading at the SHFE surged by approximately 16% compared to the previous year, a clear testament to the effectiveness of these initiatives.

In focusing on major enterprises, the SHFE has been diligently constructing the "Strong Source Assisting Enterprises" financial-service bases, leveraging the demonstration effects of leading companies to bolster overall industry participationIn 2024 alone, 76 new financial service bases were established, bringing the total to 121, composed of 85 industrial bases and 36 financial service basesThe "Strong Source Assisting Enterprises" market cultivation projects have targeted futures such as alumina, silver, stainless steel, rubber, crude oil, and the Europe-bound container shipping index, encouraging firms to utilize futures pricing for spot trading and to adopt options tools for managing price risks.

The SHFE has also recognized the crucial role that intermediary institutions play in stimulating industry engagement and has organized a series of training sessions, known as "SHFE University - Strengthening Practitioners Program." These initiatives help improve the service capacities of intermediary organizations

Collaborative efforts with universities have resulted in specialized courses targeting personnel involved in the trading and research sectors of futures companies, with participation from 261 attendees across 110 member organizationsAdditionally, partnerships with member companies have led to the successful organization of 842 diverse online and offline events, including tailored training sessions aimed at individual industry enterprises.

A spokesperson from the SHFE emphasized a dedicated commitment to maintaining the foundational principle of serving the real economyThe focal point of their ongoing reforms and innovations will be to ensure that the risk management needs of real enterprises are met, thereby serving as a driving force for future market developmentsAs they navigate the evolving landscape, the SHFE aims to continuously refine its industry service capabilities, making advances that resonate positively throughout the economy.