an explanation for mookie11, page-3

A bit more Delphic info for Punters and all others of the Delphic persuasion.

Interesting that the Chinese would trade zinc futures well above current LME.Wouldnt have something to do with current strong Chinese steel demand would it.

I note also that a large chunk of zinc was cancelled in New Orleans too.

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Shang Fulin, chairman of the China Securities Regulatory Commission, strikes a gong to mark the trading of zinc contracts which began on the Shanghai Futures Exchange yesterday.

NEW zinc contracts traded on the Shanghai Futures Exchange, which started trading yesterday, will help China have a say in pricing of the metal globally and boost its ability to hedge against price fluctuations, said the chairman of the China Securities Regulatory Commission.¡¡¡¡2006Öйú½ðÈÚÄê¶ÈÈËÎï»î¶¯ÆÀÑ¡

"New zinc contracts can also improve China's influence in pricing of the metal in the global trade and boost zinc-related industries' ability to hedge against fluctuation in zinc prices," Shang Fulin, the commission's chairman, said at the exchange's launch ceremony.

China is the world's largest producer and consumer of zinc, a bluish-white metal mostly used for galvanizing steel to protect against corrosion. A lack of futures contracts had resulted in domestic prices failing to reflect domestic supply and demand condition and left related businesses open to huge operating risks.

Previously, zinc futures and options were only traded on the London Metal Exchange, where contract prices more than doubled last year.

Zinc prices for deliveries from July to March 2008 were set at a reference level of 28,510 yuan (US$3,689) per ton before their Shanghai debut. The most actively-traded July contract settled 2.5 percent higher at 29,220 yuan yesterday.

In LME trading on Friday, zinc was quoted at around US$3,200 per ton.

Analysts have said the new zinc contracts can provide arbitrage opportunities between the Shanghai exchange and LME as the zinc traded on both is subject to the same grading requirements.

Arbitrage is the practice of buying and selling a stock or asset in different markets to yield a profit on price difference.

The new zinc products enrich the portfolio of the Shanghai commodity bourse and will certainly help strengthen Shanghai's role in the global futures market, said Vice Mayor Feng Guoqin, adding the city government will do all it can to boost the exchange.

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