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SCMP Reporter

China's first steel futures received a warm response from investors on their debut yesterday, with a surge in prices and heavy trading.
Analysts said the launch  on the Shanghai Futures Exchange would boost Beijing's confidence to further liberalise the commodity futures market.
Investors all the way from manufacturers and trading firms to individuals flocked to the screw steel and steel wire contracts, with most  betting on a price rise of the building  materials in line with Beijing's aggressive stimulus package.
Screw steel for September delivery climbed 4.8 per cent to 3,561 yuan (HK$4,142) a tonne on turnover of 12.7 billion yuan. The exchange set the base price at 3,399 yuan a tonne.
The exchange saw 354,590 lots change hands yesterday. Each lot comprises 10 tonnes.
Steel wire for September delivery advanced  6.2 per cent to 3,398 yuan per tonne from the base price of 3,199 yuan. A total of 105,070 lots  worth 3.5 billion yuan were transacted.
'The price movement was  reasonable, because we had expected a hefty jump on the first trading day due to investor  interest in the  contracts,' said Yu Yiran, an official with China International Futures. 'The trading debut of steel futures may pave a way for rice and pork contracts that are in the pipeline.'
Some analysts even predicted prices to hit the 10 per cent limit for the first trading day. The  limit drops to  5 per cent from today.  
'Obviously, speculative traders still refrain from bidding up the price in afternoon trading,' said Yongan Futures Brokerage analyst Huang Lei. 'The closing price is slightly higher than   the spot market. But it is not  enough to affect the spot market.'
The China Securities Regulatory Commission launched gold futures in  Shanghai  in January last year as it took a significant step to lure more investors to  the futures market.
The regulator spent three years preparing  for the  contract.
Beijing  would start trading rice futures on the Zhengzhou exchange and pork futures on the Dalian bourse soon, sources said.
Last year,  1.36 billion contracts were traded on the mainland's three commodity exchanges, up 87 per cent from 2007.  Annual turnover exceeded  71.9 trillion yuan, a year-on-year jump of 76 per cent.
Many of the Chinese futures traders viewed commodity exchanges as a place to reap quick gains.
In 1995, a scandal involving a bond contract almost undermined the country's futures market.
The then Shanghai Wanguo Securities hugely exceeded a ceiling on its futures position and dragged down prices of a bond futures contract,  triggering massive selling. The government  eventually spent  more than 1 billion yuan paying  off Wanguo's losses.



Investors give steel futures trading strong start