How Day Traders Made a Commodities Rally; Exchanges Keep Hiking Fees

Bloomberg: A Life Expectancy Under 4 Hours Shows China Commodity Frenzy
“The fact that duration of trade is shorter than usual confirms our fear that a big role in this current rally of prices has been fueled by private, short-term traders chasing momentum,” Gianclaudio Torlizzi, managing director of Milan-based consultancy T-Commodity srl, said by e-mail. “This dynamic increases the risk of an overshooting of the commodities market compared to fundamentals.”

Dividing the average aggregate open interest at the end of each day by the aggregate volume shows the number of futures traded for every outstanding contract. Multiply that ratio by the number of hours in each trading day and you get an estimate for the average tenure of each contract.

For iron ore and steel rebar on the Shanghai Futures Exchange, it’s under four hours; for West Texas Intermediate crude on the New York Mercantile Exchange it’s almost 40. Natural gas is nearly 70 hours.
An unsustainable trend in the market, meanwhile the exchanges are trying to cool trading with almost daily measures now:

Sina: 降温进行时!两大交易所再出手
n order to cool the market madness, the previous period, DCE, ZCE Futures on the three recently shot shouted, raising commodity trading fees, or adjust the trading margin and price limits. Today (April 26), ZCE and DCE continues to cool the commodity markets.

...DCE issued a notice, it was decided that, with effect from April 27, coke and coking coal by the breed standard fee turnover of 1.8 live births adjusted turnover of 3.6 births, iron ore breed standard fee by the turnover 1.8 adjustment of the very extreme of the turnover of 3, polypropylene breed standard fee by a turnover of 1.8 live births adjusted turnover of 2.4 live births.

Just last Friday, the DCE has just announced that from April 26, 2016 will be coking coal and coke by the breed standard fee turnover of 0.6 live births adjusted turnover of 1.8 live births.

ZCE issued a notice, it was decided that, upon settlement since April 27, PTA futures contracts margin requirement from 5 percent to 6 percent, price limits range from four percent to five percent, cotton varieties standard transaction fee from 4.3 yuan / hand adjusted to 6 yuan / hand.

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