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By Bloomberg

The Shanghai Futures Exchange started trading nickel and tin, offering the same main contracts as the world’s biggest metals bourse in London, as China seeks to extend its influence over commodities prices.

Nickel for July delivery on the first day of trading Friday fell 1 percent to close at 101,080 yuan ($16,268) a metric ton from the base price of 102,070 yuan, while tin for the same month retreated 0.8 percent to 119,270 yuan. Volumes for nickel and tin were 28,860 lots and 1,798, respectively.

China, the top metals consumer, is trying to cement its influence on commodity prices with new contracts including gold and oil while opening up trade to foreign participants to internationalize the use of its currency. Nickel and tin, the worst performers on the London Metal Exchange this year, join Shanghai’s existing futures for aluminum, copper, lead and zinc.

“Nickel’s a big market for China and so it’s a natural focus,” said Jeremy East, the Hong Kong-based global head of metals trading at Standard Chartered Plc. “A lot of nickel is imported into China and the idea of setting up a domestic benchmark definitely makes sense.”

China’s imports of refined nickel climbed in February to 10,472 tons, the highest in seven months, as dwindling supply of raw ore makes the biggest producer and consumer more reliant on shipments from overseas smelters. China accounted for 34 percent of global output in 2014, Bloomberg Intelligence estimates.

Active Trading

“Trading is active today as expected,” Hu Ziqi, an analyst at BOC International Futures Co. in Shanghai, said Friday. “It remains to be seen whether the enthusiasm will continue.”

Nickel in London has fallen 9.8 percent this year, trading at $13,670 a ton at 3:45 p.m. in Shanghai, after posting its biggest gain in four years in 2014. Tin is down 11 percent at $17,270 a ton, extending its worst annual loss since 2011.

Morgan Stanley March 24 cut its forecasts for almost all base metals and bulk commodities as China’s “dormant” industry fails to bolster demand. The bank lowered its 2015 average estimate for nickel by 23 percent from its previous forecast to $14,815 a ton and cut tin to $18,955 a ton.

The number of outstanding LME nickel futures contracts, each for 6 tons of the metal, was 275,303 as of March 20, according to bourse data. Open interest in tin, which trades in 5-ton lots, was 22,323.

“There is something to a volume boost from arbitrage,” Standard Chartered’s East said. “Having a more liquid domestic market gives more liquidity in the Asian time zone in the LME. Tin is quite an illiquid market and a successful Shanghai contract will probably help tin liquidity and the tin market.”

Metal futures in China trade higher than benchmark levels in London to reflect the costs of regional premiums, value-added taxes and import duties. Mainland traders can use both LME and SHFE contracts to hedge or profit from the difference in prices.