China-based Dalian Commodity Exchange has announced that it plans to launch the world's first coke futures contracts at the end of December this year, having already received approval from the China Securities Regulatory Commission (CSRC).
Under the contracts, storage in bulk of materials will be allowed at warehouses of coke producers, at ports, at railway depots, etc. It is expected that the contracts will enable enterprises selling ready stock coke to lower their delivery costs.
Over the past few years, China's main coke base Shanxi Province has incurred losses in the coke business. In 2009, the province produced 76.4 million mt of coke, accounting for a 22 percent share of the country's total coke production, down from a 40 percent share in the previous year.
In the context of rising coking coal costs and under pressure from downstream manufacturers, coke producers are judged to have been too passive as regards pricing when concluding deals.
The coke futures contracts are expected to help domestic coke producers to overcome their current difficult situation by avoiding risks through hedging.