China Opens Doors to Foreign Investors in Nickel and Lithium Futures
China will permit foreign investors to engage in domestic nickel and lithium futures, a move aligned with Beijing’s strategy to enhance its presence in global commodities markets. The China Securities Regulatory Commission announced in a statement on Friday that nickel and lithium carbonate are included among 14 futures and options products that will be made available. Exchanges would be encouraged to prepare for the implementation of the changes, it stated, without specifying any start dates. China stands as the globe’s foremost purchaser of raw materials; however, benchmark prices are predominantly established in financial hubs such as London, Singapore, and New York. Beijing seeks greater influence over prices, and this initiative aligns with its objective of enhancing the yuan’s attractiveness as a global currency.
Nickel futures are available for trading on the Shanghai Futures Exchange, while lithium carbonate is traded on the Guangzhou Futures Exchange. They rank among the most active domestic commodities contracts and hold critical global significance due to their role in batteries and the energy transition. “It’s a significant move,” stated Tiger Shi. He stated, “It’s likely that other metals like copper, aluminum and zinc will also become available to foreign investors due to the SHFE’s global push.”
The Shanghai exchange unveiled an internationalisation plan last May, which included a proposal to allow overseas investors to post foreign exchange as collateral for yuan-denominated trades. Limitations on foreign capital are frequently referenced as a reason for China’s inability to engage more significantly in global markets. In a statement released on Friday, SHFE noted that permitting foreign investment in futures will enhance China’s commodity pricing power, refine risk management of non-ferrous metals, and facilitate improved nickel price discovery. China’s previous efforts to liberalize commodities futures have yielded only modest outcomes.
Since 2020, the Shanghai International Energy Exchange, a subsidiary of SHFE, has provided yuan-denominated copper contracts to overseas investors, alongside crude oil contracts introduced in 2018. However, neither has significantly impacted the dominance of international exchanges. The Dalian Commodity Exchange allowed foreign investors to participate in iron ore futures in 2018, a decision that has seen a measure of success.
