India iron ore futures rise a tad; volumes moderate

Wed Feb 2, 2011 8:37 amEST
* Volumes moderate even as trading enters fourth day
* Brokers says getting enquiries from exporters for hedging

MUMBAI Feb 2 (Reuters) The world's first iron ore futures in India rose a tad on Wednesday, tracing gains in the overseas spot market, which hovered near its record high, traders and analysts said.
At 5:00 p.m. on the Indian Commodity Exchange (ICEX), iron ore of 62 percent fines for March delivery was trading 0.85 percent higher at 8,014 rupees per tonne, including freight cost for delivery to northern China.
While on the Multi Commodity Exchange (MCX), the country's largest by turnover, 62 percent fines for February delivery was trading 0.30 percent higher at 7,380 rupees per tonne, free on board.
ICEX, which is part-owned by state-run MMTC Ltd (MMTC.BO), the biggest Indian trader of iron ore, recorded volumes of 20,800 tonnes, down 15 percent from a day ago. MCX volumes were at 1,500 tonnes.
The Platts 62 percent iron ore index IODBZ00-PLT was unchanged at $187.25 a tonne, cost and freight delivered to China. The Steel Index's 62 percent benchmark .IO62-CNI=SI was steady at $185.60.

The trading entered into its fourth day, and have been witnessing moderate volumes since its launch, and analysts said volumes would remain thin until exporters get used to the contract.
"We have been getting enquiries from iron ore exporters. We see potential in these contracts going forward," said Aurobinda Prasad, head of research, Karvy Comtrade.
Before India's futures contracts, trading in iron ore derivatives were mostly done through forward swaps with exchanges from Singapore to the United States and Europe offering clearing services, hoping to draw steelmakers into hedging price risks.
India is the world's third-biggest iron ore exporter after Australia and Brazil, but shipments have been hit by an export ban in its southern Karnataka state.
India normally exports around 100 million tonnes of iron ore annually of which around a quarter comes from Karnataka. (Reporting by Siddesh Mayenkar; Editing by Rajesh Pandathil, sourced:Reuters)