ALUMINIUM futures are the darling of the Shenzhen Metal Exchange, if only because they are among a handful of commodities that actually trade like futures.
In the context of China's infant futures industry, that means that 14 of the nation's 110 aluminum producers have registered their products with the exchange and have hedged against 4 per cent of their output between 1992 and September 1995.
To outsiders that might seem like dabbling, but to a scandal-plagued industry with a reputation as a 'gambling den', it is held as proof that futures have an essential role in China's economy.
'China's futures market is the inevitable consequence of the development of its market economy . . . but it is still a market characterised by high speculation and high risk,' Shenzhen Metal Exchange president Zheng Yuanheng told a national futures conference in Beijing late last year.
Futures industry experts agreed that China's real problem was not excessive speculation but insufficient hedging.
New incentives to attract more hedgers into the futures markets could include lower margins, lower commissions and higher position limits, Mr Zheng said.
