New Stuff on the Chinese Market
The first contracts were traded on the China Commodity Exchange yesterday, with the opening due to a desire to Beijing that as the world's largest consumer of iron ore, China needs to be more active in the development pricing mechanisms of the market since the abandonment of the historical annual pricing system, or reference, in 2010.
IronA producer of Australian iron, which did not wish to be named, said that the opening of the futures market is important in that it gave the industries of iron ore and steel another tool management of price risk. Another producer said it represented "another step in the evolution of the iron ore market to other products marketed globally."
Some, but not all, Australian producers provided the exchange of information and data on the specifications and aspects of physical delivery of their supplies of iron ore. Anyone who has not said he would rather see that the depth of liquidity developed in Dalian monthly contracts before proceeding any commitment.
Contracts are 100 lots tons and will be limited to a daily fluctuation band of 4 percent, and are denominated in yuan. Iron ore futures are already listed on the Singapore Exchange Ltd and CME Group and the Intercontinental Exchange.
Hybrid solutionBut they are based on evidence rather than access to physical goods with the contract something of a hybrid of paper and physical media in that it is supposed to be based on stocks and port in Tianjin Qingdao Dalian, as well a material undisclosed mills. source social media
"There seems to be a bit of buzz about it," an Australian trader said. "But there are already a number of pricing mechanisms on the market and it remains to see if it develops sufficient liquidity to classify above the others, "said the merchant.
"There was some suspicion of the mills (about) the methodologies behind the well-known price indices. So maybe they do see in the long term provide an alternative measure of price. But if she gets the cash necessary to be able to do that remains to be seen. To be fair, the indices have the same challenge, "said the market Research Blog
Australian producers rely on Platts index for iron 62 percent iron, and the price index of steel sister. The price of Platts seeks to enhance the marginal ton of iron ore traded at a price based on bids, offers and transactions in the physical market price