Shanghai launches state-owned commodities trading firm to rival Trafigura

Shanghai has set up a state-owned commodities trading firm in a bid to strengthen the city’s role in both domestic and international raw materials markets.

Shanghai Guomao Holding was launched on Thursday by the city’s mayor, Gong Zheng, the municipal government said in a statement. The aim was to build a “new, internationalised commodity trading and investment platform with competitiveness in key sectors”, it said.

The city is mainland China’s major financial hub and home to bourses such as the Shanghai Futures Exchange, but it has long lacked a large, state-owned general trading house – unlike smaller centres such as Hangzhou or Xiamen.

For decades, the dominant commodities players in Shanghai have instead been private firms like Maike Metals International, or foreign traders such as Trafigura Group.

Shanghai Guomao will pursue an integrated business model spanning “upstream resource investment, midstream supply-chain management to downstream industrial operations”, with exposure in both physical and derivatives commodities markets, the municipal government said.