Shanghai Futures Exchange gets approval for new rubber futures

The Shanghai Futures Exchange (ShFE) said on Tuesday the China Securities Regulatory Commission (CSRC) had approved the launch of technically specified rubber (TSR) 20 futures on the exchange.

China is the world’s top importer and consumer of TSR 20 rubber, which is mainly used to make tyres, and is already traded on the Singapore Exchange. China mostly buys the grade from Thailand, Indonesia, Malaysia and other Southeastern Asian countries.

The contract will have the same trading policies as Shanghai’s crude oil futures, which means foreign investors will be allowed to trade, ShFE said in a statement, although no launch date for the rubber futures was given.

The amount of rubber Chinese companies control overseas is 2.5 times their domestic resources, according to the ShFE statement. Launching TSR 20 futures can provide price risk management for companies along the rubber industry chain, by helping them to lock in costs and stay profitable, it added.The exchange already has a rubber futures contract, on which Sinochem’s domestic SCR WF rubber brand and imported ribbed smoked sheet No. 3 (RSS3) are traded. RSS3 futures are also traded on the Tokyo Commodity Exchange.

The exchange is also planning to launch a new fuel oil contract as “as soon as possible”, its chairman said last month.