Shanghai Futures Exchange (SHFE) has announced that it will allow rebar and wire rod produced under the new national standards to be used to register warrants from July 29.
On June 25, China announced mandatory rebar and wire rod standards which will take effect from September 25 to replace the voluntary guidelines that have been in place since 2018 and 2017 for rebar and wire rod, respectively.
Meanwhile, rebar and wire rod produced under the old standards cannot be used to register standard warrants from August 19, according to a statement by SHFE on Monday this week.
"The bourse will take the necessary measures based on the market situation to facilitate a smooth transition to the new revised national standards," it added.
Accordingly, the exchange will cancel warrants for rebar and wire rod produced under the old standards and any standard warrants that remain pledged will be released after the market closes on September 24.
So, only products with the new standards will in fact be delivered from the October contracts, according to market sources.
As previously reported by SteelOrbis, regional steel trading associations in China have been seeking a delay in the implementation of the new quality standards for rebar, until either November or January 2025, after a panic sell-off, which has exerted a negative impact on steel prices recently.
Moreover, SHFE issued another statement, according to which, from settlement on July 31, it will raise the daily price limit ratio for rebar futures to be delivered in the months of August, September and October, to seven percent, seven percent and six percent, respectively, from the previous five percent.
Margins for hedging transactions for those contracts will be raised to 15 percent, 10 percent and seven percent, from 10 percent, six percent and six percent, respectively, and margins for speculative trading will be raised to 15 percent, 10 percent and eight percent, from 10 percent, seven percent and seven percent, respectively.
SHFE’s move is aiming at taking necessary risk control measures in trading, settlement, delivery and other factors in the process of the shift in standards.