(Yicai) Oct. 20 -- The Zhengzhou Commodity Exchange, one of China’s three main commodity markets, is introducing options for six more commodities, including staple fiber, soda ash and apples, to provide companies in the textile, chemicals and agriculture sectors with better risk management tools.

Manganese silicon, ferrosilicon and urea are the other three commodity options which started trading on the exchange in Zhengzhou, central Henan province today, bringing the total to 25 futures and 16 options.

These options will complement underlying futures so as to generate more reasonable prices for futures and help to satisfy firms’ diversified demand for risk management, said Xiong Jun, chairman of the Zhengzhou Commodity Exchange, which mainly deals in derivative contracts for agricultural products and raw materials for the chemical industry.

China is the world’s largest producer and consumer of all six commodities.

China accounts for 60 percent of both the globe’s output and consumption of stable fibers, which are a key raw material in the textile industry, said Chen Xinwei, president of the China Chemical Fibers Association.

Companies along the industrial chain can use staple fiber futures and options for hedging, basis trading as well as hedging against processing fees to prevent risks in spot trading, improve pricing efficiency and enhance risk management, he added.

China makes up about 45 percent of both the world’s production and usage of soda ash, said Dou Jinliang, secretary-general of the China Soda Industry Association. This chemical raw material is widely used in the new energy sector, so these options will play an important role in helping to build a supply chain of clean energies, he added.

Editors: Dou Shicong, Kim Taylor