The war in the Middle East could create an opening for Hong Kong to develop into a regional commodities trading hub, as manufacturers in mainland China and across Asia look to the city to secure more stable metal supplies, according to industry participants.

Manufacturers importing copper, aluminium and other industrial metals were increasingly considering Hong Kong as a storage base, while also seeking to tap its financial markets to hedge against price volatility driven by geopolitical tensions, said Clara Chan Yuen-shan, executive deputy chairwoman of the Federation of Hong Kong Industries (FHKI), at a recent media briefing.

“Following the conflict, many manufacturers want Hong Kong to expand its metal warehousing capacity to support a stable supply,” said Chan, who is also CEO of Hong Kong-listed metal trader Lee Kee Holdings.

“They also want to make greater use of the city’s hedging tools to manage risks. This is why it is important for Hong Kong to build out both warehouse capacity and a broader commodities trading ecosystem.”

The Hong Kong government has in recent years introduced a range of measures aimed at positioning the city as a gold and commodities trading centre.

“The government is working to develop a commodity trading ecosystem, including supporting the establishment of more approved warehouses,” Acting Secretary for Financial Services and the Treasury Joseph Chan Ho-lim told lawmakers on Monday.