Are SGE Withdrawals Gone?

Did the Shanghai Gold Exchange (SGE) just ceased publishing the weekly amount of gold withdrawn from the vaults? If so, the SGE has chosen to add another layer of secrecy over the Chinese gold market. As, SGE withdrawals provide a unique metric for Chinese wholesale gold demand. 

This started on 11 January 2016 when the SGE released the “Announcement on Clarification of Some Terms in Delivery-related Data Reports”. In the announcement the SGE states it will be publishing more detailed data regarding the “delivery amount”, “delivery ratio” and “load-out volume” in future Market Data Weekly Reports. From the SGE:

All members,

With a view to distributing market data regarding physical deliveries in a more comprehensively way and helping market participants interpret delivery-related data and reports more accurately, the Shanghai Gold Exchange (the “Exchange”) has adjusted some terms in the Delivery Reports which are included in Market Data Weekly Reports and Market Data Monthly Reports. The adjustments shall be effective as of Jan. 1st 2016 and are clarified as follows:

The term “delivery amount” refers to the sum of the trading volume of physical products and the contract delivery volume of deferred products. The term “delivery ratio” refers to the proportion of delivery amount to the total trading volume of both physical and deferred contracts.

The term “load-out volume” refers to the total volume of standard physical bullions withdrawn from SGE-certified vaults by members and customers.

The terms “accumulative delivery amount”, “accumulative trading volume” and “accumulative load-out volume” respectively refer to the sum of delivery amount, trading volume and load-out volume from the beginning of the year to the statistical time point. The term “accumulative delivery ratio” refers to the proportion of accumulative delivery amount to the accumulative trading volume.

Delivery-related data of silver products are added into the reports.

First let’s get our nomenclature straight. The “delivery amount” refers to the amount of gold within SGE designated vaults that changes ownership. Ownership of gold can change by trades in physical products – Au50g, Au100g, Au99.95, Au99.99, Au99.5, iAu100g, iAu99.99, iAu99.5 – or through deferred products – Au(T+D), mAu(T+D), Au(T+N1), Au(T+N2). Physical products cannot be traded on margin and are always delivered immediately (T+0), while deferred products can be compared to futures (derivatives), implying not all deferred volume is delivered. Hence, the SGE writes [brackets added by me]:

The term “delivery amount” refers to the sum of the trading volume of physical products [which is always delivered] and the contract delivery volume of deferred products [the number of deferred contracts that holders submit for delivery]”.

The term “delivery ratio” reflects the relationship between the “delivery amount" and the total trading volume of physical and deferred products.

The term “load-out volume” can be exchanged with “withdrawals”, a term we’ve often used on these pages for the total amount of gold withdrawn from SGE designated vaults. Previously I’ve written “deliveries” and “withdrawals” are two very separate terms that must not be commingled.

The “accumulative …” terms all speak for itself.

In the announcement the SGE promised to add more detailed data, not publish less data. However, in the first Market Data Weekly Report of 2016 we can see the following table:

Surprisingly, the “load-out volume” is not published! This means the SGE has not published “SGE withdrawals” for the first week of 2016. If this is just a one week mistake due to the new way of publishing remains to be seen. Hopefully, the SGE will resume publishing SGE withdrawals next week.

In addition, the “delivery amount” seems to match what was delivered only through deferred products in week 1 (this amount can be tracked in the daily reports). So that would be mistake number two! Let’s hope the gentleman that writes the Market Data Weekly Reports had an off day and will publish the “load-out volume” and “delivery amount” as promised in the announcement from next week on.

PS The “trading volume” in the table seems to capture all physical and deferred products traded on the SGE and Shanghai International Gold Exchange (SGEI). It does not capture any OTC trades that are settled at the SGE or SGEI.