Shanghai’s 18-Point Plan to Dominate Global Non-Ferrous Metal Pricing

• Pillar 1: Market Interconnectivity – Linking futures and spot markets via “Commodity Clearing Connect” and improving cross-platform risk management.
• Pillar 2: Internationalization – Opening futures and options to global investors and establishing overseas delivery mechanisms.
• Pillar 3: Ecosystem Building – Promoting blockchain transparency, warehouse receipt legislation, and cultivating competitive trade entities.

The Shanghai Municipal Financial Regulatory Bureau (Shanghai Shi Wei Jin Rong Ban 上海市委金融办) officially released the “Action Plan to Strengthen Futures-Spot Linkage and Enhance the Capacity of Non-Ferrous Metals (Youse Jinshu 有色金属) Commodities.”

This isn’t just another bureaucratic announcement.

This is Shanghai’s strategic move to cement its position as a global commodity pricing authority while strengthening its status as a “Five Centers” international financial hub.

The plan tackles a real problem: how to make Shanghai’s non-ferrous metal markets more connected, more international, and more influential in a world where commodity pricing directly impacts industries worth trillions.

Let’s break down what this means for investors, traders, and anyone paying attention to China’s financial infrastructure.

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Why Shanghai’s Non-Ferrous Metal Markets Matter (And Why Now?)

Non-ferrous metals—think copper, aluminum, zinc, nickel—are the backbone of modern manufacturing.

They flow through:

• Automotive production
• Construction and infrastructure
• Home appliance manufacturing
• Electric vehicle batteries
• Renewable energy systems

Price discovery for these commodities doesn’t happen randomly.

It happens in established futures markets where traders, hedgers, and speculators converge to find true market value.

Right now, London and New York dominate global non-ferrous metal pricing.

Shanghai wants to change that.

The Shanghai Futures Exchange (Shanghai Qi Huo Jiao Yi Suo 上海期货交易所) and Shanghai Clearing House (Shanghai Qing Suan Suo 上海清算所) already handle massive trading volumes, but there’s a gap: their influence on global prices isn’t proportional to their size.

That’s what this Action Plan aims to fix.

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The Three Pillars of Shanghai’s Strategy

The 18-measure Action Plan breaks down into three core pillars that work together to build market dominance.

Pillar 1: Promoting Non-Ferrous Metal Market Interconnectivity

The Problem: Futures markets, spot markets, and derivatives markets operate in silos.

The Solution: Connect them.

Here’s what Shanghai is doing:

Enhanced Communication Between Clearing and Risk Management

The Shanghai Clearing House and Shanghai Futures Exchange are exploring deeper coordination on:

• Clearing protocols — streamlining how trades settle across different venues
• Risk management frameworks — ensuring systemic stability as trading volumes increase
• Data sharing infrastructure — creating transparency across the market ecosystem

This isn’t trivial.

When clearing and risk systems communicate seamlessly, participants can execute larger positions with confidence.

Leveraging “Commodity Clearing Connect” for Spot Markets

Non-ferrous metal spot trading venues can now use a new settlement mechanism called “Commodity Clearing Connect” to move funds between futures and spot markets.

Why this matters: It eliminates friction.

Instead of managing separate accounts and settlement procedures, traders can move capital efficiently between markets, encouraging more participation and deeper liquidity.

Bringing Industrial Enterprises Into the Derivatives Game

The plan specifically targets companies that actually use non-ferrous metals:

• Automotive manufacturers
• Construction firms
• Home appliance producers
• Industrial suppliers

Instead of just being price takers, these companies can now actively participate in futures markets and OTC (over-the-counter) derivatives to hedge their commodity exposure.

Real-world impact: When end-users of commodities participate in price discovery, markets become more efficient and prices reflect actual supply-demand dynamics from the physical economy.

This is how Shanghai shifts from being a regional trading hub to a global pricing authority.

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Pillar 2: Raising Internationalization Levels of Non-Ferrous Metal Markets

This is where Shanghai gets aggressive.

Right now, non-ferrous metal futures contracts on Chinese exchanges are primarily accessed by domestic investors.

Shanghai’s plan: Open the gates internationally.

Expanding Access for International Investors

Shanghai will gradually bring non-ferrous metal commodity futures and options into the scope of products open to international investors.

This means:

• Overseas hedge funds can trade Shanghai copper contracts
• International mining companies can use Shanghai futures to manage risk
• Global institutional investors can directly participate in price discovery
• The contracts become real global benchmarks, not just Chinese ones

The plan also includes refining business rules to suit these internationalized products, meaning Shanghai is adjusting compliance, settlement, and trading mechanics to meet international standards.

Innovating Cross-Border Delivery Mechanisms

Here’s where things get creative.

“Shanghai Prices” only matter globally if you can actually deliver commodity contracts to international participants.

The plan explores:

• Overseas warehousing — storing physical metals in approved international facilities
• Cross-border delivery — streamlining how metal actually moves from Shanghai-registered warehouses to overseas locations
• Risk-controlled implementation — ensuring compliance and stability as these mechanisms operate

This is crucial.

When international buyers can efficiently take delivery of metal purchased on Shanghai futures contracts, those contracts become functionally equivalent to London or New York contracts.

Pricing power follows.

Leveraging Shanghai’s Financial Infrastructure

Shanghai has built world-class infrastructure over the past decade:

• Advanced clearing systems
• Robust custody and warehouse networks
• Deep liquidity pools
• Regulatory frameworks that attract major institutions

The plan formalizes how this infrastructure strengthens international influence and global authority of “Shanghai Prices.”

Translation: When you’re trading non-ferrous metals globally, Shanghai’s quotes become the reference price everyone watches.

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Pillar 3: Aggregating Market Participants and Building an Ecosystem

Markets don’t function in isolation.

They need participants, infrastructure, data, and incentives.

Shanghai’s third pillar focuses on building a robust non-ferrous metal market ecosystem that works together.

Cultivating Competitive Trade Entities

The plan encourages the development of trade entities with comprehensive competitive advantages.

This means:

• Larger, more sophisticated commodity trading companies
• Firms that can handle complex positions across futures, spot, and derivatives
• Market makers that deepen liquidity
• Price discovery mechanisms that function efficiently

Shanghai is essentially saying: “We’ll support the infrastructure and rules that let the best trading firms operate at scale.”

Strengthening the Industrial Supply Chain

The plan encourages cooperation between commodity enterprises and upstream/downstream companies in the industrial chain.

Think about it:

A mining company that produces copper needs to sell it.

A construction firm that uses copper needs to buy it.

In between are traders, processors, and logistics companies.

When these players all participate in Shanghai’s markets, the ecosystem becomes self-reinforcing:

• More buyers and sellers = better price discovery
• Better price discovery = more confidence in Shanghai prices
• More confidence = more international participation
• More international participation = global pricing influence

Deploying Blockchain for Transparency

The plan actively promotes Blockchain (Qu Kuai Lian 区块链) applications in the non-ferrous metal sector.

Specific benefits include:

• Data sharing across platforms — breaking down information silos
• Data sharing across institutions — allowing participants to access real-time market information
• Data sharing across regions — creating transparency from mine to end-user

Blockchain enables tamper-proof records of metal quantities, grades, and ownership.

This reduces fraud risk and build confidence in Shanghai-registered warehouse receipts.

Strengthening Warehouse Receipt Legislation

The plan includes support for warehouse receipt legislation to ensure the validity and authority of registered warehouse receipts.

Why this matters:

Warehouse receipts are basically IOUs for physical metal stored in approved warehouses.

If you hold a warehouse receipt for 50 tons of copper in Shanghai, that’s as good as holding the actual metal (and more liquid).

Strong legal backing makes these receipts trustworthy.

International investors are more willing to participate when they know Shanghai warehouse receipts have ironclad legal protection.

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What This Means for Global Commodity Markets

This isn’t incremental change.

This is Shanghai actively competing with London and New York for global commodity pricing power.

The current state:

• London Metal Exchange (LME) sets global copper, aluminum, and zinc prices
• NYMEX handles energy and some metals in the US
• Shanghai Futures Exchange handles huge volumes but follows global prices

The future Shanghai is building:

• International investors trading Shanghai contracts directly
• Physical metal accessible across borders via Shanghai warehouses
• Industrial companies using Shanghai derivatives to manage risk
• Real-time price discovery informed by Chinese supply and demand dynamics
• “Shanghai Prices” becoming the reference rate globally

This is strategically important because whoever sets commodity prices wields significant economic power.

When Shanghai’s quotes move global markets, Chinese financial institutions gain enormous influence.

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The Bigger Picture: Shanghai’s “Five Centers” Ambition

Shanghai’s government has declared an ambitious goal: become a “Five Centers” global financial hub.

The five centers are:

• International financial center
• International shipping center
• International trade center
• International asset management center
• International pricing center

This Action Plan directly supports the international pricing center objective by establishing Shanghai as the global authority on non-ferrous metal commodity prices.

It also supports the shipping and trade center goals by creating incentives for physical commodity flows through Shanghai.

The interconnection is deliberate: When Shanghai controls commodity pricing, more trading activity naturally flows through the city, enhancing all five centers simultaneously.

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Key Takeaways for Investors and Traders

If you trade or invest in non-ferrous metals, pay attention:

• Shanghai’s non-ferrous metal futures are about to become more liquid and more trusted as international investors gain access and physical delivery mechanisms improve
• Industrial hedgers have new tools to manage commodity risk through improved futures-spot linkage
• “Shanghai Prices” will gain credibility as the plan increases market interconnectivity and ecosystem participation
• International institutional participation will increase dramatically as Shanghai opens product access and harmonizes rules with global standards
• Warehouse receipt infrastructure becomes strategically important as blockchain and legal reforms strengthen confidence in registered metal

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This 18-measure Action Plan represents a major shift in global commodity market structure.

Shanghai isn’t trying to be a regional player anymore.

Shanghai is building the infrastructure, rules, and ecosystem to become the global reference point for non-ferrous metal pricing.

And judging by the strategic thinking embedded in these 18 measures, they’re playing the long game with serious conviction.

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References

• Shanghai Releases 18 Measures to Enhance Non-Ferrous Metal Commodities and Global Pricing Influence – CCTV News (央视新闻客户端)
• Official Website – Shanghai Futures Exchange (SHFE)
• Official Website – Shanghai Clearing House
• Shanghai’s ‘Five Centers’ Initiative – Shanghai Municipal People’s Government