Trading of iron ore
derivatives surges in August: nominal
value cleared tops $1bn
London. 5 September 2011
The volume of iron ore derivative contracts cleared using TSI’s iron ore
price index hit a new record of over 6.6million tonnes in August, an increase of
more than 50% on the previous monthly record set in July. The nominal value of
these derivatives - including swaps and options - exceeded $1bn in a single
month for the first time.
The majority of swap contracts were cleared by Singapore Exchange (SGX), which processed 8,554 lots in August, equivalent to 4.3mt. This represented an increase of 11% on its previous monthly record. The volume of ‘open interest’ on SGX also reached a record high of 8,661 lots (4.3mt), up 38% on the July peak.
CME Group enjoyed a particularly marked increase in iron ore trading activity, clearing over 2mt of derivatives basis TSI, of which 1.5mt were options. LCH.Clearnet (London), NOS Clearing (Oslo) and Indian Commodity Exchange (Mumbai) also cleared iron ore derivatives contracts basis TSI in August.
“The iron ore derivatives market continues to gain traction with greater numbers of participants now comfortable trading higher volumes and a wider range of financial products,” comments Oscar Tarneberg, Senior Analyst, Asia, at TSI.
“We are delighted to witness such an increase in market players’ confidence,” adds Gabrielle Richou, manager at the Iron Ore and Steel Derivatives Association (IOSDA). “Liquidity risk is starting to diminish, which should encourage a new wave of market participants entering in the coming months," she says.
The Steel Index’s (TSI) reference price for 62% Fe iron ore fines ended the month at US$179.9/dry metric tonne cfr Tianjin port, the highest level since 6 May 2011, bringing the August monthly average to US$177.45/dmt – up 2.6% from July.
Since their launch, more than 55 million tonnes of iron ore financial contracts have been cleared basis TSI, with a nominal value of over US$8.6 billion. This represents over 95% of all iron ore contracts cleared during the past 2 years.
The majority of swap contracts were cleared by Singapore Exchange (SGX), which processed 8,554 lots in August, equivalent to 4.3mt. This represented an increase of 11% on its previous monthly record. The volume of ‘open interest’ on SGX also reached a record high of 8,661 lots (4.3mt), up 38% on the July peak.
CME Group enjoyed a particularly marked increase in iron ore trading activity, clearing over 2mt of derivatives basis TSI, of which 1.5mt were options. LCH.Clearnet (London), NOS Clearing (Oslo) and Indian Commodity Exchange (Mumbai) also cleared iron ore derivatives contracts basis TSI in August.
“The iron ore derivatives market continues to gain traction with greater numbers of participants now comfortable trading higher volumes and a wider range of financial products,” comments Oscar Tarneberg, Senior Analyst, Asia, at TSI.
“We are delighted to witness such an increase in market players’ confidence,” adds Gabrielle Richou, manager at the Iron Ore and Steel Derivatives Association (IOSDA). “Liquidity risk is starting to diminish, which should encourage a new wave of market participants entering in the coming months," she says.
The Steel Index’s (TSI) reference price for 62% Fe iron ore fines ended the month at US$179.9/dry metric tonne cfr Tianjin port, the highest level since 6 May 2011, bringing the August monthly average to US$177.45/dmt – up 2.6% from July.
Since their launch, more than 55 million tonnes of iron ore financial contracts have been cleared basis TSI, with a nominal value of over US$8.6 billion. This represents over 95% of all iron ore contracts cleared during the past 2 years.
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