CONF: Mutually-beneficial iron ore pricing necessary
Source: Mysteel
May 24, 2018 19:48
Chinese steel mills and iron ore suppliers should be working towards a mutually-beneficial iron ore pricing scheme for the sustainable development in the long run for both parties, Liu Zhenjiang, Secretary General of the China Iron & Steel Association (CISA) said at the Singapore Iron Ore Forum on May 24.
“The iron ore market should not rely on a single pricing index for its prices, and every index has its pros and cons, so it should be a mix of a few pricing indices as references to better reflect the real market situation so as to lower pricing risks more efficiently,” he emphasized when speaking at the SGX event in Singapore.
Liu explained on the sideline of the conference that for any iron ore pricing index, sample size is a crucial criterion in deciding on its representativeness of the market, and for that, he pointed out that “Mysteel has been making a lot of efforts in collecting as much data as possible when compiling its indices to guarantee its accuracy”.
Many new happenings in the global iron ore market will help to promote the sustainable and rational development for this sector, Liu noted.
“The iron ore market now has physical trading both for spot and long-term supplies, as well as derivatives such as futures, which will work together to mature the market and realize a long-term, mutually-beneficial cooperative relationship among the market participants,” he commented.
Dalian Commodity Exchange in Northeast China’s Liaoning province, the world’s only exchange with physical iron ore deliveries for its iron ore futures, contributed to the new happenings by having commenced iron ore international trading on May 4, allowing the overseas investors to register accounts with the US dollar, hoping to better serve its “pricing discovery” role via enriching its pool of investors, as Mysteel reported.
Vicky Binns, Vice President of Marketing Minerals, BHP, noted the positive changes in the iron ore market dynamics too, commenting that iron ore and coking coal e-trading platforms such as GlobalOre, GlobalCoal, COREX, and exchanges such as SGX and DCE are all helping in “pricing transparency and risk management”, and “commoditization is enabling customers to lock in margins”.
In 2017, DCE’s iron ore futures trading volume hit 32.9 billion tonnes in single counting, and SGX cleared 1.7 billion tonnes of iron ore last year, both being more than China’s iron ore import volume at 1.07 billion tonnes last year.
Written by Hongmei Li, li.hongmei@mysteel.com
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