As 2016 draws to a close, looking back at the year’s performance across various capital markets, commodity futures stand out as particularly distinctive: on the one hand, several contracts have posted cumulative gains exceeding 100%; on the other, recent sharp market volatility has left many investors wiped out in an instant.

　　On December 11, at China’s first Professional Traders Conference hosted by Trading House, several leading figures in the futures industry voiced similar sentiments.

　　Wu Hongtao, general manager of Shanjing Investment Management Co., Ltd., told a reporter from The Paper that even at its peak, an excess return rate of 10 times was still not the highest in the industry.

　　In 2016, the commodity futures market was dominated by the black‑metal complex. The “unparalleled dual cokes”—coking coal and coke—experienced nearly uninterrupted upward momentum from January through November.

　　The price of the most active coking coal futures contract rose from 565 yuan per ton to a year-to-date peak of 1,676 yuan per ton on November 14, marking a gain of 197%. Following a series of corrections, the contract closed at 1,273 yuan per ton during the night session on December 9, with the cumulative increase still standing at 125% after the pullback.

　　Coking coal followed a similar trend: starting at 643 yuan per ton at the beginning of the year, it reached a year-to-date high of 2,276.5 yuan per ton, peaking on November 14 with a maximum gain of 254%. On the night session of December 9, it closed at 1,754.5 yuan per ton, reflecting a year-to-date increase of 173%.

　　However, industry insiders believe that, in fact, the revenue contributed by black‑commodity sectors generally accounts for less than half.

　　 A rare market trend in the history of “Double 11” sales.

　　Wu Hongtao told a reporter from The Paper, “That October rally was actually something very few people managed to capitalize on. For us, a major market move isn’t necessarily a good thing, because futures differ from stocks: an uptrend doesn’t automatically translate into profits. Futures allow you to go long or short. In a strong market, just one or two bearish candles can wipe out even the most seasoned traders.”

　　On the night session of November 11, multiple contracts surged to their daily upper limits immediately after opening; however, just 40 minutes later, the market took a dramatic turn, plunging to their lower limits within minutes. This extreme price action can be regarded as the most thrilling day in the futures industry so far in 2016.

　　Wu Hongtao recalled the events of that night, saying, “I barely slept at all that evening. Around 11 p.m., a friend called me to say that a fund managing 50 million yuan had posted a 40% return this year—only to lose it all overnight.”

　　He also revealed that, following the brutal sell-off during “Double 11,” at a dinner gathering, two of the six or seven private‑equity investors present—each managing futures‑related funds—had products on the brink of liquidation.

　　Zhang Wenjun, Chairman of Beijing Aohan Investment Co., Ltd., also expressed his agreement. In an interview, he noted that while the futures market has experienced multiple instances of consecutive limit-downs in the past, this time’s situation is even more extreme, primarily because the pace of the market reversal has been unprecedented and affects not just a single contract but a broad range of products.

　　Zhang Wenjun, who has been engaged in individual futures investing since 1996, grew his capital from RMB 100,000 to RMB 10 million within five years.

　　He told a reporter from The Paper, “As for the black‑metal sector, we don’t know how many people have made big profits, but it’s true that some have suffered substantial losses.”

　　According to Wu Hongtao and Zhang Wenjun, the sudden market reversal on November 11 was driven, on the one hand, by the exchange’s eight consecutive “gold‑standard” restriction orders, which, under sustained policy pressure, left investors increasingly uneasy at elevated price levels. On the other hand, during that evening’s night session, participation was lower than during the day session, resulting in fewer orders being placed at lower prices. Meanwhile, with sizable profit‑taking positions, their liquidation easily triggered algorithmic trading, further accelerating the market’s turnaround.

　　 Commodity bulls may persist in 2017.

　　Regarding the 2017 market outlook, Zhang Wenjun revealed that he is bullish on rebar and hot-rolled coil within the black‑metal sector.

　　He said, “This year, supply-side reform has been concentrated in the coal sector, which is why we’ve seen sharp gains in coking coal and coke. Next year, I expect supply-side reforms to extend to the steel industry, and in the future, the main drivers in the black‑metal complex will shift to rebar and hot‑rolled coil. Other supporting factors include sustained momentum in infrastructure investment, as well as…” Real estate “The market continues to trend upward.”

　　In addition, Zhang Wenjun is also optimistic about Nonferrous metals Nickel, as it posted the smallest gain among the base metals in 2016, presents an opportunity for a catch-up rally.

　　Ding Hongbo, founder of Hangzhou Shangze Investment Management Co., Ltd., is equally optimistic. He told a reporter from The Paper: “Going forward, threaded steel will take center stage, and the commodity bull market is sure to persist. When a bull market arrives, we must dare to think big and make bold assumptions.”

　　As for Agricultural products In the chemical industry, Wu Hongtao, known as the “Soybean Meal King,” told a reporter from The Paper that his current commodity futures positions cover four categories: oilseed meals, oils and fats, rubber, and PTA.

　　He is particularly bullish on the rubber outlook for 2017. “In Hainan, there is little enthusiasm for replanting rubber trees, so supply shortages are virtually certain to emerge in the future. That’s why I remain firmly optimistic over the long term.”

　　However, Wu Hongtao pointed out that 2017 will not maintain its strong momentum and may instead face a correction. “I believe this year’s market has been exceptionally robust, and we can expect a period of consolidation in the first half of next year. As for the extent of that adjustment, it will depend on how the market evolves going forward. Following this year’s surge, all price moves that had diverged from underlying fundamentals have now been re‑aligned. Whether this new positioning is justified remains to be tested by the market, so it would be wise for investors to take a breather and let things settle next year. Investing requires patience and waiting for opportunities, but that doesn’t mean there are no opportunities at all.”