Qianhai Mercantile Exchange (QME) officially made debut today (19 October 2018) with trading in alumina.  The first spot transaction saw 3,000 tonnes of alumina changed hands between Chalco Trading and Xiamen Xiangyu at a price of RMB3,030 a tonne, recording the first benchmark pricing of spot alumina based on actual transactions in the Mainland.

There have always been calls from the alumina industry in Mainland China for changes to existing trading and pricing models necessitated by an urgent need to establish an open and transparent spot trading mechanism to provide market participants with credible benchmark prices.  As a commodities trading platform established by Hong Kong Exchanges and Clearing Limited (HKEX) in Mainland China, QME has launched the first spot product of alumina and hopes to work with industry customers in establishing fair prices and sound market order to channel funds into the real economy, promoting the efficient operation and development of the market.

QME adopts the spot quotation and trading model.  The trading hours are 09:00 to 15:45 (without closing hours at noon / no lunch breaks) from Monday to Friday (except for national holidays).  To encourage participation, all handling fees will be waived until 31 December 2018.

Relevant leaders and senior officials from Shenzhen Municipal Government, the Municipal Financial Service Office, Authority of Qianhai, China Nonferrous Metals Industry Association, and representatives from more than 20 industry chain core customers, financial institutions and market participants attended the event.  Charles Li, Chief Executive of HKEX and Chairman of QME, and five other guests co-hosted the launching ceremony in the ring-shaped trading floor of QME.

Wen Xianjun, Deputy Chairman of China Nonferrous Metals Industry Association, said in his speech that QME’s introduction of spot alumina as its first product had neatly catered for market demands and provided physical enterprises with great, and was an important step in facilitating the creation of a sound price formation system for China’s aluminium industry chain and the healthy and steady development of the industry.  It is expected that QME and the nonferrous metal industry will continue to expand their cooperation in the future to provide more and better products and services for enterprises in the physical industry chain.

Representing the enterprises, Chalco’s Lu Dongliang said in his speech that Chalco would actively participate in the alumina spot trading platform through its three major platforms, namely Chalco Trading, Chalco Materials, and Chalco Logistics, assisting QME to offer channels to fund the real economy while strengthening the coordination between trade and logistics industries.  Through making the most of their respective advantages, they hope to jointly promote the transformation of the alumina business model and give new impetus to the high-quality development of the alumina industry.

HKEX’s Charles Li thanked everyone for their support to the opening of QME.  He said, "It has been our dream to promote the development of the commodities market and ultimately achieve China’s influence on commodity prices.  The debut of QME today generating the first alumina spot transaction price has taken us a step closer to realising this dream.  Going forward, I hope that QME can go one step at a time and, leveraging the strengths of HKEX Group, steadily build an RMB pricing centre for global commodities.”

HKEX Group and Qianhai Financial Holdings invested in the establishment of QME in Qianhai, Shenzhen, as a key project of the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area.  Since its establishment, QME has been actively discussing policy implementation and in-depth cooperation with regulators and industry customers, in the hope of establishing a commodity spot platform that is rooted in the Mainland and connected to the world leveraging the unique advantages of HKEX Group.

After three years of exploration and planning, QME has established a development direction based on spot commodities and rooted in serving the real economy and aims to set up a standardised asset system that connects entities/enterprises with finance in terms of technology, cross-border cooperation and finance, to offer a practical solution to the financing difficulties facing physical enterprises  With the synergy effects created through the coordination with London Metal Exchange (LME), a subsidiary of HKEX Group, it is hoped that the strategic goal of making QME an RMB pricing centre for global commodities can ultimately come true.