Nov 17 (Reuters) - China will roll out a new copper futures contract this week that will be open to foreign traders, in a push to boost yuan adoption and wrest some pricing power away from the established industry benchmark in London.
The addition of copper, the world’s most-traded base metal, to a growing suite of international commodity futures will increase China’s appeal to the global trading community, analysts say, even if limits on yuan convertibility remain a barrier to wider adoption.
Such yuan-denominated products serve two strategic ends: they give global market participants another reason to use the yuan while also boosting China’s pricing power in key commodities markets.
The copper contract starts trade on Thursday on the Shanghai International Energy Exchange (INE), where China’s flagship international crude oil futures also trade.
China’s launch of its crude oil futures in 2018 sought to increase influence over commodity pricing and promote the yuan, whose internationalisation is a longstanding policy objective.
While trading volumes for that contract have been impressive, especially this year, at just one sixth of the dollar-denominated benchmark Brent crude they are far from dominating the global market.
China’s weight in the global copper market, however, is much larger, accounting for about half the world’s usage.
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