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Metals trading to come to Chelyabisnk

Metals trading to come to Chelyabisnk
The Urals city of Chelyabinsk will become the home to Russia’s first ferrous metals exchange in March, under the aegis of the St. Petersburg International Mercantile Exchange (SPIMEX).

­The regional Industry and Natural Resources Minister, Valery Prudskoi, has announced that SPIMEX Chelyabinsk branch will open its first trading session in March 2011

 “Companies located in the ore-rich Urals will sell 1 percent of their monthly production via the new trading floor,”

Nikolai Vinnichenko, Russian Presidential Representative in the Urals Federal District, says that the metals exchange will be available for trading non-ferrous and other metallurgy sector products produced in the Urals region, as well as ferrous metals.

"We want to launch a Urals based trade mechanism that successfully operates and offers trading in other commodities and financial instruments in Russia. The Urals region produces more than 43% of the steel industry. There is a very large sector of non-ferrous metals trading."

Vinnichenko added that this would greatly enhance the transparency between buyers and sellers, and help stabilize market prices.

“We expect that pricing will be set in Russia, not abroad. The second important issue is that the trade will stimulate the work of engineering enterprises that are now in a very difficult situation due to lack of a pricing mechanism, and world price focus."

Chelyabinsk Region Governor, Mikhail Yurevich, hailed the new establishment saying that this could help to attract more investors in the region where the metals are produced.

“It is ridiculous that the price of metal in its motherhood is times higher than outside of the region. That brings trouble to engineering production and heavy machinery industry in the region.  If the pricing mechanism is fixed and less speculation is possible more investors will be willing to develop the production here.”   

Deputy Head of the Financial Markets of the Federal Antimonopoly Service Anastasia Androsenko, noted that FAS is developing an incentive system and special conditions for those participants who will begin trading on the metals exchange

“The exchange trade of metals that Russia exports could solve several important problems, including transfer pricing and taxation and we should provide security and motivation for all traders”

Vitaly Shurupov, Head of the trade department at Milkom Invest says the metal market has specific differences and supply conditions that will not provide the new exchange enough volumes to impact pricing policy.

“In contrast to the global oil market, the market of metals is more local, tied to the specific conditions of supply. A section for ferrous and non-ferrous metals trade already exists in the commodity market of the Moscow Stock Exchange. Last week there were only 14 deals totaled to seven million roubles in the commodity section – none of the transactions included metals. So I would not expect a big turnover of the new exchange, however, if the trade mechanism will be operated by highly qualified specialists and will be secured with legal laws it could slash commercial bribes.”

Other trading platforms being envisages include Murmansk, and Buryatia where a timber exchange is planned.