October 31, 2018 / 2:40 PM / 20 days ago

UPDATE 1-Steinweg approved by ShFE as an official warehouse in mainland china

(Adds detail, comment)

By Pratima Desai

LONDON, Oct 31 (Reuters) - Logistics and warehousing firm C. Steinweg has been approved by by the Shanghai Futures Exchange (ShFE) as an official warehouse in mainland China, the company said on its website.

“The approved location in Yangshan Free Trade Port, which finished construction only in August of 2017 offers now both bonded and SFE storage,” Steinweg said, adding that at full capacity it could hold up to half a million tonnes of metal.

“Located close to the Yangshan deep sea container port, this facility is the first fully foreign-owned Shanghai Futures Exchange warehouse.”

Sources say, the move to approve the Netherlands-based warehousing company for physical delivery against ShFE’s futures contract, is another step toward an international copper contract, that can be traded by foreigners.

“The copper options they launched were a first step towards a contract to attract foreign trade, approving Steinweg is another step,” a metal trading source said.

ShFE launched copper options in September, aiming to take a slice of the global market in one of its biggest challenges yet to London and New York rivals.

The options contract will also help ShFE gather traction with international players as it prepares to open its copper futures contract to foreign investors.

Over the past decade, the Shanghai bourse which was set up in 1999 has carved out a bigger share of the global copper futures market, challenging the London Metal Exchange’s (LME) near dominance as China’s economy boomed and retail investors flocked to commodities futures trading.

“Steinweg have been very active in the free trade zone, and hold a large share of bonded warehousing stock, so maybe this is a natural step for them to service clients in the region,” said Xiao Fu, head of commodity market strategy at Bank of China International.

“They are certainly one of the more trusted foreign warehousing companies in China.”

Earlier this year, ShFE launched an oil contract to allow investors for the first time take advantage of differences in supply-demand dynamics across world oil markets. (Reporting by Pratima Desai; additional reporting by Eric Onstad and Tom Daly in Beijing; editing by Louise Heavens)

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