(Bloomberg) — China’s newest commodity exchange plans to launch its first contract later this year, focusing on industrial silicon after wild swings in the metal’s price in 2021.
The Guangzhou Futures Exchange plans to offer silicon contracts in the second half of the year, said a bourse official. It’s also planning to create an index that tracks a broad range of commodities, and is awaiting final government approvals for the launch, said the official, who asked not to be identified because the information isn’t public.
The exchange began operations in April 2021 as China’s fifth bourse to focus on commodities and derivatives. It’s seeking to find niches in goods that are not yet traded on other domestic platforms, and has received approval for 16 products, including polysilicon, rare earths and lithium, according to its website.
Silicon is used in everything from solar panels to computer chips to car parts. Prices skyrocketed more than 300% to record highs last October as production was disrupted by power shortfalls in the main manufacturing bases of Yunnan and Sichuan.
Hoshine Silicon Industry Co., a top producer of the metal, said in its annual report in April that it expects the contracts to be offered in August, and that they could help win more price-setting power for China in the global market. Hoshine didn’t respond to requests for comment about the contracts.
The US government last year sanctioned Hoshine and barred imports of its products, accusing it of forced labor in its factories in Xinjiang. Hoshine didn’t respond to requests for comment on the accusations at the time, and the Chinese government has repeatedly denied claims of forced labor and other human rights abuses in the region, calling them “the lie of the century.”
China accounts for about 80% of global industrial silicon production, and its output could rise 7% to 2.8 million tons this year, Hoshine said in its report. Demand within China is about 2.3 million tons, compared to about 700,000 tons in the rest of the world, it said.
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