Friday, 04 Nov 2011
According to Steel Index, the volume of forward iron ore swaps cleared globally soared to an all-time high above 9 million tonnes in October, as prices collapsed on slower demand from top consumer China.
Steel Index said that the contracts were valued at around USD 1.4 billion and trumped a previous record in August when volume reached more than 6.6 million tonnes worth over USD 1 billion.
Steel Index said that the majority of the contracts last month were cleared on the Singapore Exchange where volume hit 15,443 lots, or 7.7 million tonnes.
Spot iron ore prices .IO62-CNI=SI lost nearly 31% in October, their biggest monthly loss ever, as weaker steel demand in China slashed appetite for the raw material.
But prices began recovering on Monday as a more than 35% slump since September drew buyers back into the market, although traders said worries that steel demand in China may remain tepid for the rest of 2011 could limit any rebound.
Mr Oscar Tarneberg senior analyst for Steel Index in Asia said that "The surge in iron ore swaps trading volumes in October reflects the increased price risk in the physical market.”
He added that "With prices falling so precipitously, swaps offer physical participants a tool to hedge against the impact of sharp price movements and uncertainty."
(Sourced from Reuters)
According to Steel Index, the volume of forward iron ore swaps cleared globally soared to an all-time high above 9 million tonnes in October, as prices collapsed on slower demand from top consumer China.
Steel Index said that the contracts were valued at around USD 1.4 billion and trumped a previous record in August when volume reached more than 6.6 million tonnes worth over USD 1 billion.
Steel Index said that the majority of the contracts last month were cleared on the Singapore Exchange where volume hit 15,443 lots, or 7.7 million tonnes.
Spot iron ore prices .IO62-CNI=SI lost nearly 31% in October, their biggest monthly loss ever, as weaker steel demand in China slashed appetite for the raw material.
But prices began recovering on Monday as a more than 35% slump since September drew buyers back into the market, although traders said worries that steel demand in China may remain tepid for the rest of 2011 could limit any rebound.
Mr Oscar Tarneberg senior analyst for Steel Index in Asia said that "The surge in iron ore swaps trading volumes in October reflects the increased price risk in the physical market.”
He added that "With prices falling so precipitously, swaps offer physical participants a tool to hedge against the impact of sharp price movements and uncertainty."
(Sourced from Reuters)
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