May sees record volume of iron ore swaps cleared
The volume of Over-the-Counter (OTC) iron ore swap contracts cleared in May smashed all previous records. Over 3.5 million tonnes of swaps with a nominal value of more than US$625 million were cleared during the month using The Steel Index (TSI) 62% Fe iron ore fines reference price for settlement.
The majority of contracts were traded on the Singapore Exchange (SGX), which cleared 6,905 lots: an increase of more than 55% on its previous monthly record. The volume of ‘open interest’ on SGX also reached a record high of 5,667 lots in May, up 68% on the previous highest level seen in March this year.
Iron ore financial contracts are also cleared using TSI for settlement on LCH.Clearnet (London), the CME Group (Chicago), NOS Clearing (Oslo) and Indian Commodity Exchange (Mumbai).
“May was a stellar month for iron ore swaps,” notes Rory Macdonald, Head of TSI’s Iron Ore Operations. “Despite seeing a dip investments in other commodity classes after May’s commodity correction, IOS volumes looked healthy all month. Beyond the numbers themselves, what’s really encouraging is that we’re seeing flow from Chinese participants pick-up and open-interest hit a new high. This suggests that liquidity is building down the curve, offering the industry a really valuable tool for managing the price uncertainty and volatility in the market.”
A representative from the Iron Ore and Steel Derivatives Association (IOSDA) added “May is to be viewed as a breakthrough. Iron ore swaps have burst through perceived liquidity constraints and given the tremendous potential for growth; we expect volumes to go from strength to strength.”
The increase in swaps trading came during a month which saw the iron ore spot price largely in decline. TSI’s 62% Fe reference price opened May at US$182.60/dry metric tonne before increasing to a monthly high of US$183.30/dmt on May 4. Following this it was downhill all the way, falling by US$13.50/dmt to finish the month at US$169.80/dmt, some 7% below the opening price.
Since their launch, more than 41 million tonnes of iron ore financial contracts have been cleared basis TSI, with a nominal value of over US$6 billion. This represents over 95% of all iron ore contracts cleared during the past 2 years.
Meanwhile, trading in Turkish scrap derivatives (basis TSI) continued to increase in May and interest is building around TSI-based European HRC swaps.
The majority of contracts were traded on the Singapore Exchange (SGX), which cleared 6,905 lots: an increase of more than 55% on its previous monthly record. The volume of ‘open interest’ on SGX also reached a record high of 5,667 lots in May, up 68% on the previous highest level seen in March this year.
Iron ore financial contracts are also cleared using TSI for settlement on LCH.Clearnet (London), the CME Group (Chicago), NOS Clearing (Oslo) and Indian Commodity Exchange (Mumbai).
“May was a stellar month for iron ore swaps,” notes Rory Macdonald, Head of TSI’s Iron Ore Operations. “Despite seeing a dip investments in other commodity classes after May’s commodity correction, IOS volumes looked healthy all month. Beyond the numbers themselves, what’s really encouraging is that we’re seeing flow from Chinese participants pick-up and open-interest hit a new high. This suggests that liquidity is building down the curve, offering the industry a really valuable tool for managing the price uncertainty and volatility in the market.”
A representative from the Iron Ore and Steel Derivatives Association (IOSDA) added “May is to be viewed as a breakthrough. Iron ore swaps have burst through perceived liquidity constraints and given the tremendous potential for growth; we expect volumes to go from strength to strength.”
The increase in swaps trading came during a month which saw the iron ore spot price largely in decline. TSI’s 62% Fe reference price opened May at US$182.60/dry metric tonne before increasing to a monthly high of US$183.30/dmt on May 4. Following this it was downhill all the way, falling by US$13.50/dmt to finish the month at US$169.80/dmt, some 7% below the opening price.
Since their launch, more than 41 million tonnes of iron ore financial contracts have been cleared basis TSI, with a nominal value of over US$6 billion. This represents over 95% of all iron ore contracts cleared during the past 2 years.
Meanwhile, trading in Turkish scrap derivatives (basis TSI) continued to increase in May and interest is building around TSI-based European HRC swaps.
No comments:
Post a Comment