Iron Ore InternationalizationIron Ore Internationalization 中文

Optimizing Contract System to Fully Boost Functioning of Iron Ore Futures

Date:03 April 2019
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The 5th China Commodities Industry Forum, supported by Dalian Commodity Exchange (DCE) and organized by Xinhu Futures, was held on March 29. At the forum, a DCE official said that DCE would optimize contract rules and systems, further reduce the cost and threshold of involving in the iron ore futures market, and enhance the market operation efficiency and quality, thus fully boosting the functioning of iron ore futures and attracting the participation of overseas clients.

This official said that the iron ore futures had exerted profound influence on the pricing mode of the spot market since its listing and become a key reference for the spot trading at ports in China, and the basis trading with iron ore futures as the pricing benchmark had been popular among iron and steel enterprises. To promote the smooth operation of the international business, DCE had implemented the bonded delivery and warehouse receipt replacement successively, and it was researching the introduction of brand delivery system to attract the mainstream ores with higher acceptability in the market and safeguard the representativeness of futures price.

As the only iron ore derivatives adopting single physical delivery in the world, the Chinese iron ore futures has achieved the accumulated delivery amount of over 5 million tonnes since its listing. It successfully realized bonded delivery after 4 months since ushering in overseas participants in September 2018, and blazed a trail in adopting bonded delivery for bulk and general goods in bonded regulation areas. In 2018, a total of 6 iron ore futures contracts engaged in delivery, with the delivery amount totaling 1.96 million tonnes. In particular, the 1805 Contract presented the delivery amount of 1.06 million tonnes, the 2nd highest delivery amount of a single contract since the listing of iron ore futures.

The official said that DCE would continue to promote the implementation of the brand delivery system for iron ore futures and optimize the bonded delivery system and expand the bonded delivery area, the bonded delivery warehouse capacity and the maximum amount of factory warehouse receipt registration, thus better satisfying overseas mainstream ores’ demand on involving in the delivery. In addition, DCE would speed up the pace of listing iron ore options and intensify technical system support, market expansion service and legal support service, with an aim of encouraging overseas industry clients, like international mainstream mines and trading companies, to take part in the Chinese futures market and conduct international trade at the iron ore futures price.

Disclaimer: This English translation may be used for reference only. In cases there is any discrepancy between the English version and the original Chinese version, the original Chinese version shall prevail. Dalian Commodity Exchange may change or update this English translation without any prior notice and shall accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or change with regard to this English translation.

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