On the morning of June 14, Dalian Commodity Exchange (DCE) and Guangdong Materials Group Corporation (GMGC) inked a strategic cooperation agreement in Guangzhou to cooperate in the development of the timber index futures and other fields as the sole partner for each other.
During the talks between Li Zhengqiang, DCE President & CEO, and Cai Chaolin, Chairman of GMGC, before the signing of the agreement, both sides believed that the move marked a deep cooperation between futures and spot markets and they should seize the opportunity and give full play to their own advantages so as to enrich and perfect the instrument system for serving the industries and facilitate the development of the real industries.
Li briefed the forum held after the talks on the basic facts and market focuses of DCE. He said that currently DCE is actively promoting the construction of new markets, accelerating the development of new products, further improving and innovating the systems of market rules, and developing new ways of trading. The cooperation is of great significance to both sides: first, the “China Yuzhu Timber Price Index” may be released to the market for reference of the members and clients of DCE; second, the two sides may give full play to the complementary strengths to make concerted and effective efforts in the development of the timber index products and build a more perfect system of timber products; third, the platform of the Dalian futures market may be effectively used to disseminate the concepts and operational skills of futures to real enterprises and guide the enterprises on the timber industry chain to better participate in and utilize the futures market. He also said that GMGC’s model of integrating futures and spots is of typical value, on the basis of which the two sides may continue to deepen the cooperation in the future.
According to GMGC President Luo Weiyu, GMGC focuses on two aspects to achieve the development strategies with one in doing the traditional businesses flexibly and effectively and the other in developing the new businesses represented by futures, finance-like businesses, and e-commerce. It is a win-win choice for the two sides to start the cooperation with the timber products. With 40% of total timber trade in China, Guangdong has been famous for “China as the world center of timber, Guangdong as the China center of timber, and Yuzhu as the Guangdong center of timber” with the only timber price index in the world found in Yuzhu. It is believed that it is sure to introduce new business models on the basis of the traditional timber trade models and improve the level of the market development on DCE’s futures platform.
At the signing ceremony held after the forum, DCE Vice President Zhu Lihong and GMGC Vice President Wei Wei signed the agreement respectively.
In the afternoon, the DCE delegation visited the Yuzhu Timber Market under GMGC, deeply comparing notes on the cooperation in research and development of Yuzhu Timber Index Futures and providing suggestions for improving the Yuzhu Timber Index released currently by the market.
Sources said that founded in 2001 with an annual timber trade of more than 4 million cubic meters, delivery of more than RMB15 billion, and total terminal logistics of over RMB30 billion, the Yuzhu Timber Market boasts the leading position in scale in the industry. In September 2012, the "China Yuzhu Timber Price Index" became the first national-level timber price index prepared by the National Development and Reform Commission after passing the appraisal of the national-level expert panel. Besides, the market set up the “global timber price center” to release the price-related information online by selecting 75 sites at home and abroad to collect price information and employing part-time personnel regularly collecting the timber prices in various regions.
According to the sources, in order to expand services for the forestry industry, DCE began to develop timber futures products in 2010, and currently the projects of fiberboard futures product and the core-board futures product have been approved with the demonstration of contracts and preparation for listing being vigorously carried out at DCE.