Article 1

In order to ensure normal operation of the delivery business of Hot-Rolled Ribbed Steel bars (hereinafter referred to as the Steel Bars) at Tianjin Bohai Commodity Exchange (hereinafter referred to as the Exchange), and to regulate the delivery activities of the Steel Bars in the designated  warehouses (hereinafter referred to as the Warehouses ),  this Rules is  enacted subject to the Interim Measures of Tianjin Bohai Commodity Exchange for Trading Market Supervision and Administration, Jin Zheng Fa [2009] No 32. and the Rules of Tianjin Bohai Commodity Exchange for Continuous Spot Trading Management.

Article 2

The delivery of the Steel Bars shall be operated in accordance with this Rules. The Exchange, traders, and the Warehouses shall comply with this Rules.

Article 3

The designated Steel Bars warehouses refer to the warehouses that the Exchange has designated to provide physical delivery and storage services for the Steel Bars, as listed in the e-contracts, in order to fulfill the obligation of the contracts.

Article 4

The designated manufacturers refer to those large steel manufacturers which the Exchange has acknowledged as being able to manufacture qualified products that meet the specifications of the contract of the Steel Bars.

Article 5

A Registered Warehouse Receipt refers to a valid document evidencing that the trader has delivered the qualified commodity to the Warehouse and received the Exchange’s approval and registration. The documents also assure a certain quantity and quality for a batch of the commodity.

Article 6

Any trader who submits a delivery declaration must be a legal entity that is registered with the Industrial and Commercial Administration Department, possesses the corresponding Steel Bar’s business license, and relates to the Steel Bar’s production, operation, or consumption activities.

Article 7 Entry of Commodity:

7.1.1

Application for the entry of commodities

Traders shall submit an Application for Entry to the Warehouse according to the Warehouse’s requirements before delivering the commodities. The application shall include the manufacturer’s name, the grade, the diameter (mm), the weight, the quantity, and the applicant’s official seal.

7.1.2

The Warehouse shall decide within one business day whether to approve the application, considering both its capacity and the commodity owner’s willingness, and indicate the deadline for commodity entry if the application is approved.

7.2 Entry of commodity

7.2.1.

Traders shall deliver the commodity to the Warehouse indicated in the Application for Entry within a limited time. Traders shall submit the Product Quality Certificate (original or a photocopy with the trader’s official seal), issued by the designated manufacturer to the Warehouse, if the Steel Bars are delivered into the Warehouses within 30 calendar days after being manufactured. If the entry date of the Steel Bars is beyond 30 calendar days from its manufacture date, traders shall submit both the Quality Inspection Report issued by a designated quality inspection institution, and the original Product Quality Certificate issued by its designated manufacturer, or a photocopy with the trader’s official seal on it.

7.2.2

The Warehouse shall inspect and verify the commodity received in accordance with the rules of the Exchange.

7.2.3

The commodity owner must be present while their commodity is being inspected, otherwise it will be deemed that the commodity owner accepts the inspection result given by the Warehouse.

7.2.4

After the commodity owner has finished arranging the commodity entry as per the Warehouse’s request, the Warehouse shall issue the Exchange’s standard-formed Warehouse Receipt to the owner. The Warehouse Receipt consists of two identical portions; the Warehouse and the commodity owner each keep one portion.

Article 8

The commodity referred to in the Warehouse Receipt can only be claimed either against the Bill of Lading issued by the Exchange, or by the original Warehouse Receipt.

Article 9 Formation of the Registered Warehouse Receipt

9.1 Application

9.1.1

Traders who possess warehouse receipts can submit an Application for Registered Warehouse Receipt in written form to the Clearing Department of the Exchange.

9.1.2.

The trader shall pay off all storage-related fees up to the day of application.

9.1.3

The quantity of the Steel Bars applied for in the Registered Warehouse Receipt must be an integral multiple of 60 tons.

9.1.4

The registered trademarks of the Steel Bars applied for in the Registered Warehouse Receipt shall be approved by the Exchange. Traders shall submit the Product Quality Certificate (original or a photocopy with the trader’s official seal) issued by the designated manufacturer to the Warehouse, if the Steel Bars are delivered into the Warehouses within 30 calendar days after they are manufactured. If the entry date of the Steel Bars is beyond 30 calendar days after its manufacture date, the traders must submit both the Quality Inspection Report issued by a designated quality inspection institution, and the original Product Quality Certificate issued by its designated manufacturer, or a photocopy with the trader’s official seal on it.

9.2 Verification & Approval

Upon receiving the Application for Registered Warehouse Receipt and the original Warehouse Receipt, the Delivery Department of the Exchange shall, within 2 trading days, contact the Warehouse, verify the details of the Warehouse Receipt as to the quantity and quality of the Steel Bars, and decide whether to issue the Registered Warehouse Receipt. 

9.3 Issuance

For those Warehouse Receipts that qualify for registration, the Delivery Department of the Exchange shall generate and issue a corresponding Registered Warehouse Receipt to the trader. 

The Steel Bars for physical delivery should be 9 meters in length. The Steel Bars of each Registered Warehouse Receipt shall be produced by the same manufacturer. All products in each Receipt should be in the same trademark, same grade, and have the same diameter and length. The earliest manufacture date of any Steel Bar referred to in the Receipt is taken to be the manufacturing date for that Receipt. The validity of the Registered Warehouse Receipt is either three months after the Steel Bars are manufactured, or the quality inspection report is issued.

The Exchange shall inform the Warehouse when the Registered Warehouse Receipt has come into effect. The commodity referred to in the Registered Warehouse Receipt shall only be picked up against the corresponding Bill of Lading. 

Article 10

The Registered Warehouse Receipt shall be circulated in paper form for physical delivery business.

The usage of the Registered Warehouse Receipts in the physical delivery process shall be in accordance with the Detailed Delivery Rules of the Exchange.

Article 11

After delivery matching, the Exchange issues a Bill of Lading to the buyer, according to the Registered Warehouse Receipts that the buyer has received. A Bill of Lading shall be stamped by the Delivery Department of the Exchange, and will then be faxed to the buyer. The buyer shall then stamp his or her own official seal on the Bill of Lading. The person appointed to pick up the goods must have personal identification, and must arrive at the corresponding Warehouse by the date stipulated on the Bill of Lading.

The Exchange shall also fax the Bill of Lading with the Delivery Department’s seal to the warehouse. After a detailed verification, the Warehouse shall arrange delivery for the traders.

Article 12

With the Warehouse’s permission, traders holding the Bill of Lading may choose to have a new Warehousing Services Agreement and obtain new Warehouse Receipts.

Article 13 Stockpiling of the Commodity

The Steel Bars for physical delivery shall be stored separately, and shall not be mixed with any other non-deliverable Steel Bars.

Article 14 Surplus or Shortage clauses

14.1

The Steel Bars for physical delivery shall be measured by their actual weight. The surplus or shortage of physical products for each Registered Warehouse Receipt shall not be beyond ±5%, and the scale difference shall not be beyond ±0.3%.

14.2

In the circumstance of a surplus or shortage, the buyers shall calculate payment using the settlement price of the trading date on which the delivery declaration is successfully matched.

Article 15

Buyers are entitled to authorize a designated Quality Inspection Institution (approved by the Exchange) to inspect the quality of the Steel Bars.

Article 16

In the case of a dispute regarding the quality or the quantity of the Steel Bars, the buyer shall submit an application in written form within 2 business days after D4, i.e. D5 and D6, to the Exchange, and is obligated to submit the Quality Inspection Certificate issued by the designated Quality Inspection Institution within 7 business days after D4, i.e., between D5 and D11.

It shall be deemed that the buyer is satisfied with the commodity picked up if no claim for dispute declaration is submitted within the above-mentioned period of time. The Exchange shall not accept any overdue applications.

The defaulted party responsible for the dispute about the quality or the quantity shall bear the inspection expenses, related costs, as well as any immediate economic loss incurred as a result.

Article 17

The owner of the commodity shall assume all responsibilities of any quality issue of the commodity occurring under normal storage conditions.

Article 18

The Exchange reserves the right to interpret the said Delivery Rules.

Article 19

Please refer to the Measures for Registered Warehouse Receipts Management, the Detailed Delivery Rules, or other applicable rules for matters not mentioned herein.

Article 20

This Regulation shall become effective as of the date of promulgation.

Tianjin Bohai Commodity Exchange Ltd.

2010-6-04