The number of_Ｔｈｅ　Ｐｒｉｃｅ　ｏｆ　Ｓｕｃｃｅｓｓ

　　 　　Watching the price of copper skyrocket from 18,000 yuan per ton last year to about 50,000 yuan in the first half of this year, Chen Xingfu can only sigh.
　　Chen, 41, is head of an electronics company engaged in printed circuit board production in Shenzhen, south China’s Guangdong Province. It has been the most difficult year since the company was founded in 1992. “If the situation continues, it’s hard to imagine that the company can make it through this year,” he said.
　　The biggest problem for Chen is the rising cost of components, mainly driven by the cost of raw materials. According to him, so far the price of copper clad laminates has increased by 25 percent and that of other materials is also increasing.
　　Many enterprises dealing with raw materials are under pressure from rising prices. According to the National Bureau of Statistics, the price of raw materials and fuel oil rose by an average of 9.8 percent in the first half of this year, maintaining a trend evident since 2003.
　　Undoubtedly, China’s increasing demand for commodities, mainly raw materials and energy, to fuel its booming economy has been the critical element in the explosion in prices of almost all commodities over the past couple of years.
　　The country is now the world’s biggest consumer of steel, copper and zinc and the second-largest user of energy. The Chinese economy grew 10.2 percent in the first quarter of this year, against 9.9 percent in the same period last year.
　　But China finds itself increasingly hit by soaring import prices due to Chinese enterprises’ lack of pricing power in the global commodities market.
　　
　　Futures market the key?
　　
　　Public concern over the country’s worsening trade environment has caused policy makers to try to reverse the trend through promoting the development of a futures market.
　　Investors in international futures markets used to feel confused about what was behind the big price fluctuations. But the answer is now clear―the Chinese factor.
　　The Chinese element has become an important indicator of global economic trends, said an expert at the China International Futures Co., the largest company of its kind in China. “No matter what the economic prospects in China are, it is always considered the cause of a bull market as people believe China will keep growing and its commodity demand will last for a long time.”
　　Take the soaring copper price at the end of last year as an example. When China’s State Reserve Bureau bet on a price decline after a record high of $3,000 per ton was reached, prices on the London Metal Exchange (LME) still jumped. Though the State Reserve Bureau repeatedly announced that China’s cooper reserves were sufficient and even held several public auctions, the international copper price still skyrocketed to a stunning $5,000.
　　Copper was not alone. Almost all LME metal contract prices have been rising, with the increases in zinc, aluminum and chromium surpassing that of copper, as traders believe China’s need for raw materials to fuel its double-digit growth rate is insatiable.
　　
　　The more frightening fact is that many funds are jumping into the commodities market, with some buying copper and aluminum contracts for 2007, 2008 and even 2010 as they believe demand is increasing.
　　According to a recent report by CLSA Securities, China’s consumption of commodities, including steel, iron ore, copper, aluminum and oil, will maintain a double-digit annual growth rate to 2010, and China will continue to propel the increasing momentum of global demand for commodities.
　　Hu Yuyue, Director of the Securities and Futures Research Institute at Beijing Technology and Business University, said China is the largest buyer of almost all products in terms of consumption growth. “As long as China buys, prices go up.”
　　According to Stephen Roach, chief economist of Morgan Stanley, last year, the growth in China’s aluminum, iron ore, steel, cement, zinc and copper consumption was equivalent to 50, 84, 108, 115, 120 and 307 percent of the growth in global consumption, respectively.
　　Meanwhile, China has to buy at high prices although it is a large buyer of these products. Official statistics show that from 2002 to 2005, the average import price growth rate of iron ore, chromium and aluminum skyrocketed by 146 percent, 154 percent and 111 percent, respectively. Chinese steel enterprises had to accept a 19 percent hike in iron ore prices this year from BHP Billiton, the world’s largest resources company, following a 71.5 percent jump in 2005.
　　Government figures also show that iron ore imports rose steadily to roughly 276 million tons in 2005 from 208 million tons in 2004 and 140 million tons in 2003.
　　An analyst at China Minmetals Corp. said the main reason is that international speculators are behind these big ups and downs. “They don’t care how high the final price will go, as they bet countries like China have a pressing demand for these commodities.”
　　A senior official of the Ministry of Commerce said at a seminar that China had to spend an additional $30 billion on imported industrial products last year due to a lack of pricing power.
　　
　　Pricing power
　　
　　According to Chang Qing, former deputy director of the China Futures Association, the prices of commodities such as energy and raw materials are mainly determined by American and European futures exchanges, and producing and consuming nations, mostly developing countries, can only accept the already agreed upon prices.
　　“We are in a foreign market and have to obey the rules of the game. Though we are a big buyer, the pricing power is not in our hands, and we can’t afford not to buy,” said a trader.
　　There are more than 100 futures exchanges in the world, mostly in American and European countries, trading 93 commodities. But China’s futures industry, which began in 1993, is facing problems. Currently, 10 commodities are traded on three futures exchanges and there is no trading of financial derivatives.
　　At present, many enterprises cannot conduct hedging transactions on the underdeveloped domestic market, and have to turn to overseas markets, which in turn reduces the chances of developing the domestic market.
　　
　　Under China’s World Trade Organiza-tion entry agreement, the futures market is the only financial sector that has no set timetable for opening up.
　　The Chinese authorities have paid attention to the problem, and there are signs that China is making progress in this regard. One important task on the agenda is to push for pricing power in commodities, and China must take active and reliable measures to speed up the development of the futures market to achieve that purpose, said Yang Maijun, Director of the Futures Supervision Depart-ment under the China Securities Regulatory Committee, the country’s securities watchdog.
　　Speaking to the Second Forum on Energy and Metals Markets in late June at Peking University, Yang noted that the small market and limited trading products have seriously hindered China’s economic development. For example, to date China hasn’t introduced the trading of steel and oil in the futures market.
　　China is a large steel-producing and consuming country, so the trading of steel can help to promote the healthy development of the industry, hedge market risk and improve the government’s macroeconomic control, Yang added.
　　“So far, a global steel futures pricing center hasn’t taken shape, and if China starts to develop steel futures trading in a timely manner, it will surely strengthen its pricing power in the international trading system,” said Yang.
　　He also believes that the time is approaching to introduce trading in petroleum and oil products, suggesting that China should speed up its preparation in this regard.
　　But experts also acknowledge that having pricing power is something that “cannot happen too soon.” Chang of the China Futures Association predicted that it would take China quite a long time to possess pricing power, as a developed futures market is required to influence world prices.

相关热词搜索：Price Success Ｔｈｅ　Ｐｒｉｃｅ　ｏｆ　Ｓｕｃｃｅｓｓ the weight of the price of还是for