SHFE’s night market takes a fifth of overall copper trades

Overnight business on the Shanghai Futures Exchange accounted for more than a fifth of total copper trading volumes in the first nine days from when the night session was launched, figures seen by Metal Bulletin show.

Unconfirmed data from market sources suggest that about 21% of total copper trades were transacted in the night session, launched by the SHFE on December 20.

There were some differences of opinion as to whether the night session had proved more attractive to speculative retail traders or to hedgers or institutional investors. 

Night-time activity was particularly focused on the heavily-traded months, some brokers said.

“Since speculators are more likely to choose the most active contracts, compared with hedgers or arbitragers, we conclude that speculators are more active in the night trading,” a broker from Jinrui Futures in Shanghai said.

Asource from another broker in Shanghai said: “Institutional investors are especially interested in night trading, as it provides them with better opportunities to get in line with the international market. And institutional investors have staff to trade at night, rather than individual investors that have to work during day time.”

But he added: “Night trading has also re-activated some hibernating individual accounts, as some individual investors have no time to follow the market during working hours, and now they have night market to trade.”

A third broker said that of the small sample of corporate users of the market he had polled, half were using the night market and viewed it as useful, while half did not.

“It’s early days,” he told Metal Bulletin.

The night session for copper, aluminium, zinc and lead contracts runs from 9pm until 1am the following day. This is in addition to the morning and afternoon session.

“The night market has increased price continuity between the SHFE and LME. The SHFE/LME arbitrage is usually [significantly] influenced by the SHFE price changes, but in the night market LME is overwhelming and the SHFE price is more dependent on the LME price,” the Jinrui Futures broker said.

“Extended trading hours may smoothe SHFE price changes, and could help copper companies better manage their risks,” he added.

editorial@metalbulletinasia.com