SEVERAL futures exchanges took the news of impending tariff cuts badly - in stark contrast to the calm in the Shanghai and Shenzhen stock markets. Futures prices of key products plummeted when trading opened yesterday morning, although a few bounced back in afternoon trading to close marginally higher. At the Shanghai Commodity Exchange, the most active January 1996 plywood futures contract took a severe beating, losing 1.10 yuan (about HK$1.02) to close at 38.3 yuan. The March contract ended 0.9 yuan lower at 41.10 yuan. Jinpeng International Futures research and development manager Li Luejun said: 'The tariff reduction will reportedly apply to plywood imports, leading to cheaper plywood. 'That's not happy news as the plywood demand has never been particularly strong in China.' He said the plywood futures market needed a downward correction and the news announced by President Jiang Jemin that import duties of about 4,000 items would be slashed by a third was the catalyst. At the Suzhou Commodity Exchange, the January 1996 plywood future dipped 80 fen to end at 38.10 yuan. The December 1995 contract for red beans at the same exchange dropped more than 60 yuan at 2,240 a tonne, but the price of the February contract went up. The prices for some barley contracts in Shenyang, soya beans in Dalian, and coffee in Hainan also fell. Green bean futures at the Zhengzhou exchange bounced back sharply after an initial drop. The March 1996 contract rose 85 yuan at 38,700 per lot. Analysts expected the prices for various futures to be erratic over the next few days but in the Shanghai and Shenzhen stock exchanges investors took in the tariff cut news coolly. The Shanghai Composite Index shed only 1.45 points at 674.74 on a turnover of 641 million yuan, while the Shenzhen exchange closed 3.22 points higher at 1,135.35. Analysts said the drop in Shanghai was due more to a dip in B-share prices. B shares are sold to foreigners. Unlike domestic companies, B-share companies receive preferential import duties as they are considered Sino-foreign joint ventures. 'If duties are cut, then these B-share companies are likely to be hit, as that means a more level-playing field,' one analyst said. Tianjin Securities deputy general manager Gui Haoming said China now relied on exports to fan its economic growth, and any move such as the tariff cuts that would bring it one step closer to membership in the World Trade Organisation could be read as good news for domestic companies in the long run. 'Yes, the badly-run domestic companies will be hurt by the tariff reduction,' he said. 'The good ones have already braced themselves for competition. This is a good way of letting the mismanaged ones go under.'