China launches TSR20 futures trading

SHANGHAI—The Shanghai International Energy Exchange (INE) has started the trading of yuan-denominated TSR20.

The mostly traded front-month contract NR2002, for delivery in February 2020, opened at $1,365 and closed 6.6 percent higher at $1,455 at the end of the first trading day on Aug. 12.

"Given the huge (natural rubber) market in China, the listing of TSR20 futures is beneficial to the establishment of a pricing system in the global NR market, as well as to the development of China's rubber industry," INE said in a Q&A published ahead of trading.

The move, INE said, will "accelerate the upgrading of China's tire manufacturing industry," and help promote the opening up of China's futures.

According to INE, in 2018 the global output of TSR20 exceeded 8.7 million metric tons. Thailand, Indonesia and Malaysia were the main contributors, accounting for 70 percent of the total.

Most of the world's natural rubber—about 70 percent—is used in tire manufacturing, and roughly 80 percent of that is TSR20, INE said.

In 2018, the global consumption of TSR20 was nearly 8.3 million tons.

Last year, China was the largest consumer of natural rubber, accounting for about half of the world's total consumption. Europe accounted for 10 percent, while East Asia, the U.S. and India accounted for 9 percent, 8 percent and 7 percent, respectively.