Cotton Yarn Futures Trading Begins in China's Zhengzhou

Cotton yarn futures trading recently began on the Zhengzhou Commodity Exchange (ZCE) in the Henan province of China. This is the first commodity futures contracts launched in China since 2016 and will help investors mitigate price volatility risks by obligating them to buy or sell cotton yarn at a predetermined price at a specific time.

China's securities regulator had in July approved the launch of cotton yarn futures on the ZCE. The profit and cost of textile and apparel companies are directly affected by fluctuations in cotton yarn prices.

Cotton yarn futures, cotton futures and purified terephthalic acid (PTA) futures have formed a somewhat complete futures system for textile raw materials, a Chinese news agency quoted ZCE director Chen Huaping as saying.

The ZCE has launched 17 types of futures and one variety of options, covering chemical engineering, energy, agriculture and building materials.

China has been developing its commodity derivatives market and plans to gradually open it up to foreign investors. In April, the country had launched white sugar options, the second commodity options after soybean meal.

Large and frequent fluctuations in cotton yarn prices have had negative impacts on related industries in the last few years, the China Securities Regulatory Commission (CSRC) had said some time back.