Iron ore swaps rise to record 4 million tonne in July - TSI

Friday, 05 Aug 2011

Reference price provider the Steel Index said that the volume of iron ore swaps cleared globally rose to an all time high of more than 4 million tonnes in July, reflecting growing interest in the steelmaking material's hedging tool.

The bulk of the swaps, which totaled 4.09 million tonnes valued at more than USD 700 million, were cleared by the Singapore Exchange.

The Singapore Exchange said separately that volumes reached a record of 7,845 lots, equivalent to 3.92 million tonnes, beating the previous record of 6,905 lots, or 3.45 million tonnes, reached in May.

Other swap contracts are cleared by LCH. Clearnet in London, the CME Group, Norway's NOS Clearing and the Indian Commodity Exchange. All the bourses use TSI as the reference price index.

Iron ore swaps, launched in May 2008, are cash-settled contracts that allow steelmakers and traders to hedge their cost after the industry abandoned a system of pricing contracts once a year in favor of a more flexible quarterly scheme.

(Sourced from Reuters)