CHINA IRON ORE CONF: Transparent forward curve a key benefit of SGX’s high-grade derivative contract, top exec says

The availability of a high-grade iron ore derivative has brought a “whole new dimension” to the market, with the development of a forward curve being a key benefit, Andrew Glass, head of ferrous trading at Anglo American, said last week at Fastmarkets MB’s China Iron Ore conference in Beijing.

The derivative contract provides additional measurement of what the 62% Fe iron ore and the 65% Fe iron ore grade spread and the outright 65% Fe iron ore market projects into the future, Glass said. “As long as we get liquidity, the curve produced everyday by the Singapore Exchange (SGX) significantly helps producers to plan mining and provides a view into the future of differentials,” Glass added. The spread between the mid and high-grade iron ore segments is also a good proxy for steel mills’ margins, the executive said. The 65% Fe iron ore derivative contract, which is settled based on the Fastmarkets MB 65% Fe iron ore cfr China index, was launched by SGX on December 3, 2018, after the market called for suitable risk mitigation tools to manage high-grade segment exposure. The...

Published

Deepali Sharma

March 06, 2019

02:50 GMT

Singapore