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Chinese metal industry requires investigation of "malicious" short selling

Date: 2018-06-08 Popularity: 623

According to Reuters, industry sources said that a major association in the Chinese metal industry asked authorities to investigate "malicious" short selling of metals on the Shanghai Futures Exchange. This is the latest sign of panic among big metal producers about falling prices.

Four sources said the appeal was issued by the China Nonferrous Metals Industry Association and was supported by some large state-owned metal producers. Previously, metal prices in the Shanghai market had fallen to their lowest level since the global financial crisis of 2008/09.

At the same time as the price fell, the open interest of the Shanghai Futures Exchange increased sharply last week, and the trading volume of several metals also increased sharply, prompting some producers to blame the pressure of falling prices on short selling operations.

"(We) will take action on malicious short selling," said one of the sources, who is an official of the China Nonferrous Metals Industry Association.

The official did not give details, including whether the association has filed a complaint with the regulator, the China Securities Regulatory Commission.

Another source, a manager of a private investment company that produces aluminum and sells aluminum, copper and zinc, said the association suggested an investigation to the Securities and Exchange Commission.

The SFC did not respond to a request for comment. The association also did not comment.

The move highlights growing tension between producers and investors. On the one hand, current prices are causing producers to suffer losses, and on the other hand, investors believe that the slowdown in China's economy and the global oversupply of metals are a reason for the overall escape from industrial commodities.

A second source said that the Securities and Futures Commission earlier this month asked an international trading company to explain its aluminum futures positions; the company provided evidence that the short positions were for hedging with metals delivered by Chinese refineries. End.

Due to the sensitivity of the event, he did not specify the business name.

Shanghai's main aluminum futures SAFcV1 fell to a record low of 9,620 yuan per ton on Tuesday, and the total number of open positions hit a record because of a large number of short positions.

"Some producers are asking to investigate malicious short sales ... Nickel prices have fallen abnormally this week," a third source said, a manager of a state-owned copper refinery.

The Securities and Futures Commission has taken similar steps before short selling the stock market.

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