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Section: Daily Dispatches

Opponents Squash Platinum Plans of Shanghai Gold Exchange

By Henry Sanderson
Financial Times, London
Monday, May 20, 2019

The Shanghai Gold Exchange has delayed plans for a platinum contract after failing to gain political clearance, threatening a push to open up a market for the precious metal dominated by the arm of a big state-owned company.

The SGE had been due to launch a two-way cash-settled contract -- enabling users to sell and buy platinum -- in the first quarter but it failed to win approval, according to two people familiar with the exchange.

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The failure highlights the difficulties of reforming China's domestic commodity markets, where state-owned companies hold sway.

A platinum contract in China would have given carmakers in the world's largest auto market the ability to hedge the platinum they use in their catalytic converters or fuel cell vehicles. Investors would also have been able to speculate on prices of the metal.

"It is quite a setback for the market," said one industry source in China.

China is the world's largest consumer of platinum, using 73.8 tonnes last year, a third of global demand, according to Johnson Matthey, a maker of platinum-based catalysts.

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