Dalian: The Dalian Commodity Exchange is set to launch its first iron ore futures contract before year-end, possibly starting a big shift in Chinese mills’ hedging policy, and potentially bad news for Singapore, the world’s leader for iron ore swaps.
It will be the first yuan-denominated iron ore futures contract in China. The exchange received the green light to trade from Beijing in mid-September.
In 2012, 127m tonnes of iron ore was traded on swaps markets around the world. In the first eight months of this year around 210m tonnes was traded, with the Singapore Stock Exchange accounting for more than 90% of the trades.
When the Dalian exchange launched thermal coal futures it was met by huge domestic demand, and there’s a strong chance the iron ore equivalent will also prove hugely popular with local buyers worried about currency fluctuations. [09/10/13]