July sets new record volume for iron ore swaps cleared
The volume of Over-the-Counter (OTC) iron ore swap contracts cleared in July reached a new high, smashing the previous record reached in May this year. Over 4 million tonnes of swaps with a nominal value of more than US$700 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 Singapore Exchange (SGX), which cleared 7,845 lots in July, equivalent to 3.92mt. This represented an increase of more than 13% on its previous monthly record. The volume of ‘open interest’ on SGX also reached a record high of 6,255 lots, up 10% on the previous highest level seen in May 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).
“In spite of a relatively stable spot market, swaps saw another busy month, demonstrating the growing number of participants in the market,” comments Oscar Tarneberg, Senior Analyst, Asia, at TSI. “Continued heavy spread trading has contributed to growing volumes, as has increased willingness to trade further out on calendar contracts as liquidity grows.”
TSI’s 62% Fe reference price moved up steadily through July, supported by higher steel prices in China and restocking by mills, rising from US$167.7/dry metric tonne on 1 July to finish the month on a high of $175.5/dmt. The average TSI 62% Fe reference price for the month, used to settle July swap contracts, was 172.98/dmt – up 1.2% from June.
Since their launch, more than 50 million tonnes of iron ore financial contracts have been cleared basis TSI, with a nominal value of over US$7.5 billion. This represents over 95% of all iron ore contracts cleared during the past 2 years.
Meanwhile, trading of steel derivatives saw another major milestone reached in July with the first swap contracts cleared for North European hot rolled coil (also basis TSI). Activity also continued to increase around the trading of Turkish scrap imports derivatives which saw the first swap contracts cleared on LCH.Clearnet in June, using TSI as the settlement index.
The majority of contracts were traded on Singapore Exchange (SGX), which cleared 7,845 lots in July, equivalent to 3.92mt. This represented an increase of more than 13% on its previous monthly record. The volume of ‘open interest’ on SGX also reached a record high of 6,255 lots, up 10% on the previous highest level seen in May 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).
“In spite of a relatively stable spot market, swaps saw another busy month, demonstrating the growing number of participants in the market,” comments Oscar Tarneberg, Senior Analyst, Asia, at TSI. “Continued heavy spread trading has contributed to growing volumes, as has increased willingness to trade further out on calendar contracts as liquidity grows.”
TSI’s 62% Fe reference price moved up steadily through July, supported by higher steel prices in China and restocking by mills, rising from US$167.7/dry metric tonne on 1 July to finish the month on a high of $175.5/dmt. The average TSI 62% Fe reference price for the month, used to settle July swap contracts, was 172.98/dmt – up 1.2% from June.
Since their launch, more than 50 million tonnes of iron ore financial contracts have been cleared basis TSI, with a nominal value of over US$7.5 billion. This represents over 95% of all iron ore contracts cleared during the past 2 years.
Meanwhile, trading of steel derivatives saw another major milestone reached in July with the first swap contracts cleared for North European hot rolled coil (also basis TSI). Activity also continued to increase around the trading of Turkish scrap imports derivatives which saw the first swap contracts cleared on LCH.Clearnet in June, using TSI as the settlement index.
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