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Bright forecast for futures market

By Wang Danna (China Daily)
Updated: 2009-11-02 07:40

As a leading financial institution in northeastern China, the Dalian Commodity Exchange (DCE) has established its futures market as a platform for businesses in the area to compete internationally. It has proved a significant force in pushing forward the economic integration of the region into national and global markets.

Liu Xingqiang, general manager of DCE, said that, since its launch in 1993, the DCE has become the world's number two agricultural products futures market and its number one plastics futures market. In 2008, the transaction volume of the DCE reached 638 million lots, with a transaction value of 27.5 trillion yuan, ranking it 10th in the world.

Currently, the products officially listed at the DCE include maize, soybean No. 1, soybean No. 2, soybean meal, soybean oil, palm oil, linear low-density polyethylene (LLDPE) and polyvinyl chloride (PVC).

Taking advantage of its direct and rapid assess to information and its proximity to the transaction warehouse, the Dalian futures market has become a benchmark pricing and risk-avoidance center for related commodities in China. It has become an invaluable asset in the process of market orientation and industrial restructuring in northeast China.

Driven by the DCE information, LLDPE and PVC now play a driving role in the chemical raw materials industry and related upper-stream and lower-stream industries. Agricultural products in the soybean category are now one of the key sectors in agriculture in northeast China. It now plays an essential role in the extension of the agricultural product industrial chain and the increase of added value.

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The region's blueprint for the development of new energy initiatives will also tighten the relationships between various agricultural products. It is of considerable importance for the development of a low-carbon economy and for a shift away from the current domination of heavy industry.

Revitalizing northeast China is a national strategy. It is an important factor in the economic transformation of China. The futures market plays an important role in this process. The development of the DCE will directly reflect the aggregated growth of the service industry in northeast China.

At the same time, with more and more products on the list and the expansion of the markets, the exchange is tipped to attract a number of currently dormant social funds.

The northeastern region is an important industrial and agricultural base, with maize and soybean from the region established as key products on the futures market. As the production and consumption of serial bulk agricultural products in China have secured an important position in the international market, the global influence of the DCE is increasing. Many market analysts with the Chicago Board of Trade (CBOT), the world's oldest futures market, now assess the price of soybean by analyzing the futures price on the DCE.

Consequently, due to the expansion of its influence, the DCE's driving role, in terms of economic growth in the northeast region, has grown substantially. It has also boosted the development of several related industries, such as financial services, logistics, navigation, warehousing and information.

The DCE also helps to promote the resource distribution of maize and soybean from northeast China to the rest of the country. As a result, the need for grain plantation, growth, harvest, circulation and consumption in the northeast region has gained more attention from outside the area.