Iron Ore-Spot prices steady in India, China; steel demand eyed

Thu Mar 10, 2011 6:51am GMT
* Iron ore indexes at two-month lows; China imports slow
* Port Hedland sees 16 pct dfrop in shipments
* Stockpiles, steel demand eyed for signs market turning positive

SINGAPORE, March 10 (Reuters) - Steel prices extended losses in China on Thursday, while spot iron ore was steady to lower at around $180 a tonne as traders watched for signs of a turnaround in steel demand that would also herald a rally in ore prices.

Spot Indian fines around 63-63.5 percent iron were quoted at around $180 a tonne by consultancy Mysteel. By 0618 GMT, the 62 percent March iron ore futures contract on the Indian Commodity Exchange was 8,105 rupees ($180) per tonne, up 1.50 rupees.

Platts 62 percent iron ore benchmark IODBZ00-PLT fell $1 to $175 a tonne on Wednesday, extending its losing streak to a 15th consecutive session.

The index, widely used by global miners in setting quarterly contract prices, has lost 9.3 percent since hitting a record high of $193 in mid-February as demand from top iron ore buyer China slowed last month.

But the Steel Index's 62 percent gauge .IO62-CNI=SI was unchanged at $171.60 but Metal Bulletin's index .IO62-CNO=MB dropped $1.30 to $171.95 and all three indexes are at their lowest levels since early January.

China's iron ore imports in January-February rose 22.6 percent from a year ago to 120 million tonnes, China's customs agency said in a statement on Thursday.

"(January) demand was strong and prices were rising just because of supply issues in Brazil and Australia, and some materials (due in February) were brought forward to January," said Graeme Train, analyst with Macquarie in Shanghai.

China imported a record 68.97 million tonnes of the raw material in January, suggesting the volume tumbled to 51.03 million tonnes in February, according to Reuters calculations.

The price of ore has been in a steady decline for around three weeks on reduced Chinese appetite for imports due to high prices and a lacklustre steel market.

Shanghai's most-active steel rebar futures contract for October, fell 1.7 percent to 4,688 yuan a tonne and earlier dipped to 4,683 yuan, its weakest since mid November.

Iron ore shipments from Australia's Port Hedland fell 16 percent in February to 12.85 million tonnes from 15.33 million tonnes in January, according to port authority figures.

Shipments to China fell to 9.03 million tonnes in February from 9.97 million tonnes in January, the data showed.

Exports from India's largest port of Mormugao also dropped last month, falling 4.2 percent from a year earlier to 4.5 million tonnes.

Analysts said that suggested comparatively weaker import data for March too, with Chinese buyers meeting more of their needs from stockpiles of imported ore ashore at Chinese ports, currently standing near record highs, above 80 million tonnes.

"If you include floating stocks, inventories have been falling since mid January," Macquarie's Train said.

He noted the weakness in recent weeks in iron ore and worries about falling steel prices had made mills cautious, but added: "Once you start to see steel end use pick up, it will translate into a rapid recovery in ore prices."

(Reporting by Nick Trevethan; Additional reporting by Rujun Shen; Editing by Ed Lane, sourced :Thomson Reuters)

Iron Ore-Spot extends losses as China sits out

Tue Mar 8, 2011 4:22am GMT

SINGAPORE, March 8 (Reuters) - Spot iron ore prices extended losses on Tuesday, with Chinese buyers still shunning the market waiting for further falls or a recovery in steel prices, but supply disruptions from Western Australia could limit the downside, traders said.

Indian ore with 63.5 percent iron content was quoted in China at $181-$183 a tonne, including freight, on Tuesday, down from $182-$184 on Monday, said Chinese consultancy Mysteel.

The 62 percent March iron ore futures on the Indian Commodity Exchange (ICEX) traded flat on Monday at 8,098 rupees per tonne.

Markets may see some support after Australian miner Fortescue Metals Group trimmed its March quarter production guidance to a range of 8.5-9.0 million tonnes, down 0.5 million tonnes, after heavy rains hit its mining operations in the Pilbara area of Western Australia.

Rio Tinto , which also mines iron ore in the region, said its operations had been impacted by adverse weather conditions during the first quarter, but that it will announce any impact in its quarterly report. Other smaller miners in the area may also have been affected, traders said.

"We have seen some slowing of shipments from the northern Pilbara due to the wet. It hasn't really shown up in China port stocks yet, but we could see some erosion from the current high levels," said a Sydney-based commodities trader.

Port stocks in China, above 80 million tonnes, are around record highs as Chinese consumer hold back from buying, hoping for prices to continue to fall and a pick up in steel demand.

The most active rebar contract for October delivery on the Shanghai Futures Exchange was slightly lower at 4,821 yuan per tonne by the midday break, after having slid to 4,770 yuan last week, its weakest since Dec. 1.

Key iron ore indexes, which global miners use in setting quarterly contract prices, extended losses on Monday.

Platts 62 percent iron ore benchmark IODBZ00-PLT fell $1 to $177 a tonne. It has lost 8.3 percent in the past 13 sessions since hitting a record high of $193 in mid-February.

The Steel Index's 62 percent gauge .IO62-CNI=SI slipped $3.80 to $172.80 and Metal Bulletin's index .IO62-CNO=MB dropped $1.86 to $174.97. (Reporting by Nick Trevethan; Editing by Himani Sarkar,sourced:Thomson Reuters)

Tags :Chinese steel mills, Chinese steelmakers, rebar contract for Oct delivery, Shanghai Futures Exchange, Platts, Rio Tinto, Australia's Fortescue Metals Group

ICEX, Iron ore future contract on Tuesday, Feb15, 2011

ICEX, Iron ore future contract on Tuesday, Feb15,2011

Commodity............................Expirty..................LTP.................% Change

IRONORE62F29APR11...........29APR 2011.......7819.00............ -1.39%
IRONORE62FINES..............31MAR-2011.......8107.00............ -2.65%

Indian iron ore future contract index updated as on 15-Feb-2011 12:50:0

(Know latest updated at :http://www.icexindia.com/)

ICEX, Iron ore future contract on Friday, 04, Feb 2011 as on 5:18 PM IST

Commodity............................Expirty..................LTP.................% Change

IRONORE62FINES..............29APR 2011........7702.50............ 0.19%
IRONORE62FINES..............31MAR-2011.......8062.50........... 0.58%

Indian iron ore future contract index updated as on :04 Feb 2011 5:18 PM IST

(Know latest updated at :http://www.icexindia.com/)

Iron Ore-Key index at record in thin trade

Thu Feb 3, 2011 7:07am GMT
* Indian exporters see higher prices after China holiday
* Indian futures flat to higher, volumes lean (Adds Indian futures)
By Manolo Serapio Jr

SINGAPORE, Feb 3 (Reuters) - A key iron ore price index edged up to a record although business is expected to remain light on Thursday with top buyer China off the market for the Lunar New Year break.
Platts' 62 percent iron ore index IODBZ00-PLT rose 50 cents to $187.25 a tonne, including freight, on Wednesday. Two similar indexes by Metal Bulletin .IO62-CNO=MB and Steel Index .IO62-CNI=SI were steady at $183.36 and $185.60, respectively.
The indexes, based on spot transactions in China, are used by global miners like Vale and Rio Tinto in deciding rates for quarterly contracts.

"Buying from Chinese players have almost stopped but Indian exporters are bullish and expect prices to open higher post-Chinese New Year holidays," said Dhruv Goel, managing partner at iron ore trader Steelmint in India's eastern state of Orissa.
Chinese markets are shut for the week-long Lunar New Year holiday that began on Wednesday. They will reopen on Feb. 9.
Iron ore forward swaps mostly gained on thin volumes on Wednesday, although prices remained below those of the indexes, pointing to caution among buyers on the near-term direction of spot prices.

The Singapore Exchange-cleared February contract rose 87 cents to $183 a tonne and March added 50 cents to $174. April slipped 50 cents to $165.50.
In India, iron ore futures were flat to firmer although volumes remained lean on the fifth day since two commodity exchanges there launched the world's first futures contract for the steelmaking ingredient.
At 0630 GMT, 62 percent ore for March delivery on the Indian Commodity Exchange rose 1 percent to 8,014 rupees ($176) a tonne, including freight cost to northern China.
On the Multi Commodity Exchange, March 62 percent ore was nearly flat at 7,516 rupees a tonne, free on board.

Indian exporters are eyeing a court ruling in mid-February on whether a ban on iron ore exports from the southern Karnataka state will be lifted.
Indian iron ore exports fell for the sixth straight month in December because of the ban.
($1 = 45.57 rupees) (Editing by Ed Lane, sourced:reuters)

ICEX plans overseas delivery as iron ore futures see demand

By Soumik Dey Feb 03 2011 , New Delhi

Within days of its launch, India’s iron ore futures have garnered interest from overseas buyers and sellers of the mineral. India Commodity Exchange (ICEX), one of the first to launch the future delivery contract, said it now aims to settle even overseas delivery obligations through Indian ports.
“We are probably first exchange in the world to introduce iron ore futures. Within three days of launching contracts in the mineral, we are getting enquiries for delivery from abroad,” Rajnikant Patel, whole-time director of ICEX told Financial Chronicle.
Patel was inducted into the exchange’s board after Reliance Exchange Next bought up India Bulls stake in ICEX. He had earlier officiated as managing director and CEO of Bombay Stock Exchange and facilitated the exchange’s de-mutualisation.

“Our prices quoted for delivery to buyers abroad for the commodity is inclusive of cost, insurance and freight and deliveries could be arranged by us through Indian ports,” he said.
Overseas buyers, sellers and physical dealers with hedging interest showed interest in Indian iron ore futures. "Delivery enquiries were from mining firms in China and Australia while hedging interests were shown by some delivery agents of global steel companies. We are considering these enquiries positively as our prices are the most competitive," said Patel.
Four days from its launch, on ICEX, iron ore futures three-months delivery contracts totalled to 115,600 tonne. Iron ore futures prices after Thursday’s trade stood at Rs 7,946 per tonne after it opened on the exchange at Rs 8,036 per tonne on launch.

Meanwhile, Patel said that Reliance Spot Exchange handles ICEX spot deliveries as part of its move to streamline all operations in the exchange business and cut additional costs.
“ICEX is a one year-old exchange and we aim to focus on exchange’s business more on agricultural produce and minerals,” Patel said. Currently the exchange offers future delivery contracts for trade.
The exchange is also seeking to broad base its product range, membership and conduct introductory courses for commodities trading in the coming months. “We are not seeking growth in terms of volume perspective and would like to extend the scope and horizons of the market first instead,” he said.

On future of commodity exchange business, Patel said, that the space is likely to see some consolidation in the near future as str­onger players remain and the remaining becomes insignificant.
“We see the commodity exchange space constricting to just two or three major ones from six now. This would also be affected because of mergers and acquisitions in coming years,” Patel, also a former banker with the Reserve Bank of India said.(sourced:mydigitalfc.com)

ICEX, Iron ore future contract on Thursday, 03, Feb 2011

Commodity............................Expirty..................LTP.................% ChangeIRONORE62FINES..............29APR 2011........7665.00............ 1.51%IRONORE62FINES..............31MAR-2011.......8046.00........... 1.35%

As On :03 Feb 2011 03:35 PM IST
(Know latest updated at :http://www.icexindia.com/)

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)

ICEX, Iron ore future contract on Wednesday, 02, Feb 2011

Commodity............................Expirty..................LTP.................% Change IRONORE62FINES..............29APR 2011........7628.00............ 0.33% IRONORE62FINES..............31MAR-2011.......8013.00........... 0.84%

ICEX, Iron ore future contract on Wednesday, 02, Feb 2011
Updated till as on : 02 Feb 2011 03:05 PM
(Know latest updated at :http://www.icexindia.com/)

Iron Ore-Prices steady, China shut for holidays

Wed Feb 2, 2011 5:30am GMT

* China tightening could sap iron ore strength

* Indian futures mixed, swaps fall

By Manolo Serapio Jr

SINGAPORE, Feb 2 (Reuters) - Spot iron ore prices hovered around record levels on Wednesday with slower market activity with top buyer China off for the week-long Lunar New Year holiday.
The key price indexes, which global miners like Vale and Rio Tinto use in setting rates for quarterly contracts, were mostly flat on Tuesday but stayed near recent record highs as tight supplies remained a key concern.
The Platts 62 percent iron ore index IODBZ00-PLT was unchanged at $186.75 a tonne, cost and freight delivered to China. The Steel Index's 62 percent benchmark .IO62-CNI=SI was also steady at $185.60.
Metal Bulletin's 62 percent gauge .IO62-CNO=MB eased 23 cents to $183.36, but still near the record $184.43 hit last week.
"I'm still bullish about prices after the Chinese New Year, especially in February and March. It's highly possible that the market will continue to go up," said Destiny Guo, an iron ore physical and derivatives broker at Market Securities.
"I think end-user demand in China is picking up, although the downside risk is what China will do to address inflation."
China has been tightening monetary policy to tame inflation and analysts expect further tightening ahead if the rise in consumer prices quickens to a 30-month high in January.
Rising raw material cost had buoyed Shanghai's steel reinforcing bar futures to a record high on Tuesday, a day before Chinese markets shut for the Lunar New Year Break.
Chinese markets will reopen on Feb. 9.
In India, iron ore futures edged higher on Wednesday, riding on firmer spot prices, although volumes were expected to remain thin.
India's Multi Commodity Exchange (MCX), its largest by turnover, and the Indian Commodity Exchange (ICEX), on Saturday launched the world's first iron ore futures. But volumes have been modest since with trading limited to domestic players.
At 0500 GMT, March 62 percent fines on ICEX gained 0.8 percent to 8,011.50 rupees ($176) per tonne, including freight cost for delivery to northern China.
On MCX, 62 percent fines for March delivery slipped 0.3 percent to 7,473 rupees per tonne, free on board.
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.
The Singapore Exchange clears the bulk of global swaps and prices fell on Tuesday as investors locked in recent gains.
The February contract eased 67 cents to $182.13 a tonne, March fell $1.50 to $173.50 and April dropped 20 cents to $166. ($1 = 45.45 rupees) (Editing by Ed Lane,sourced:Thomson reuters)

ICEX, Iron ore future contract on Tuesday, 01, Feb 2011

Commodity............................Expirty..................LTP.................% Change
IRONORE62FINES..............29APR 2011........7720.00............ 1.07%
IRONORE62FINES..............31MAR-2011.......8126.50........... 1.04%
As On :01-Feb-2011 07:35 PM IST

(Know latest updated at :http://www.icexindia.com/)

Shanghai rebar hits record as iron ore stays highPublished 7:03 PM, 31 Jan 201

Monday, 31 Jan 2011, Reuters

SINGAPORE - Shanghai steel rebar futures jumped to a record on Monday as raw material iron ore prices hovered near all-time highs on tight supplies.
The most active rebar contract on the Shanghai Futures Exchange for October delivery rose 1.3 per cent to 5,104 yuan per tonne at 1556 AEDT, just off a peak of 5,110 yuan.
It was the second time that the contract chalked up a record level in less than a week, after rising as high as 5,097 yuan on January 25.
"It's the result of surging prices of raw materials over the past few months and iron ore and coking coal prices are still on the upswing," analyst at BOC International Futures Jiang Zhiwei said.

Fewer cargoes out of Brazil and India pushed spot iron ore prices to near $US200 a tonne earlier this month, a record last seen in February 2008.
Tight supplies will likely continue to support prices even with top buyer China off the market during its February 2 to 8 Spring Festival holiday.
"There is less chance of prices going down because of the supply situation but there's a cap on the rise with the Chinese out of the market," a Singapore-based trader who deals with Indian iron ore said.
"The market is very slow and I think the Indian miners are concentrating on building up their stocks before they offer it out."
Indian ore with 63.5 per cent iron ore content was quoted at $US190 to $US192 a tonne, cost and freight delivered to China, on Monday, steady from Friday, Chinese consultancy Mysteel said.
The three major iron ore indexes, based on Chinese spot prices and used by global miners to decide rates for quarterly contracts, stayed near record highs on Friday.
The Platts 62 per cent iron ore index slipped 25 cents to $US186.75 a tonne, just off the record $US187 touched on Thursday.
The Steel Index 62 per cent benchmark edged down 30 cents to $US185.30, but still near its all-time high of $US185.70 reached on January 21.
Metal Bulletin's 62 per cent gauge dipped 11 cents to $US183.76, a tad off the record $US184.43 hit last week.
Indian futures
Two Indian commodity exchanges on Saturday launched the world's first iron ore futures contracts, just days after securing regulatory approval.
But analysts say the contracts are unlikely to be considered global benchmarks anytime soon unless liquidity picks up strongly and with trading limited to domestic players.
For more on India's iron ore futures, click:
At 1530 AEDT, the March 62 per cent fines on the Multi Commodity Exchange (MCX) were up 0.7 per cent at 7,545 rupees ($US164.31) per tonne, while the March 62 per cent fines on the Indian Commodity Exchange (ICEX) rose 0.3 per cent to 8,094 rupees a tonne, according to the bourses' websites.
The price quoted on ICEX is based on cost and freight delivered to China, while the quote on MCX is on a free on board basis.
ICEX is part-owned by state-run MMTC Ltd which is the biggest Indian trader of iron ore, and MCX is the country's largest commodity exchange by turnover.
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.
The Singapore Exchange clears the bulk of global swaps and prices were mostly mixed on Friday.
The February contract slipped a dollar to $US179.50 a tonne and March gained $US1.50 to $US174.25.

India iron ore futures start to attract exporters

Monday Jan 31, 2011
* ICEX and MCX are quick to launch contracts before SMX

* SMX sticking to its planned launch in second quarter
By Siddesh Mayenkar

MUMBAI, Jan 31,2011 (Reuters) - The world's first iron ore futures contracts attracted small exporters in their first two days of trade in India and could weather the launch of a Singapore offer as players try to hedge near-record high prices.
"We were surprised to get speculators and physical market players, and some of the big names are already trading in our contracts," Sanjay Chandel, chief executive officer at Indian Commodity Exchange (ICEX), told Reuters.

ICEX and rival Multi Commodity Exchange (MCX) launched their iron ore futures contracts on Saturday, just days after the markets regulator gave permission for four contracts and trumping Singapore's SMX which plans its contract in the second quarter.
The most actively traded Indian ore contract on ICEX, which promises 62 percent iron content for March delivery, had gained 0.05 percent to trade at 7,269 rupees per dry metric tonne (DMT), cost and freight (CFR) delivered to China.

The March 62 percent fines on the rival Multi Commodity Exchange (MCX) was trading 0.04 percent down at 7,266 rupees a tonne, free on board.
ICEX, which is part-owned by state-run MMTC Ltd (MMTC.BO: Quote), the biggest Indian trader of iron ore, recorded volumes of 21,300 DMT, while on MCX, the country's largest commodity exchange by turnover, volumes fell a little to 9,200 DMT from Saturday, the first day of trading.
Chandel expects more corporate participation in the near-term. "Going forward, we are bullish on the commodity, as far as turnover is concerned. Many miners and exporters are already our members," he said.

"There are many waiting on the fence. They have plans, and discussions are on," said Chandel.
Iron ore exporters Phulchand Exports and Bagadiya Brothers have taken membership with the exchanges, a source at an exchange dealing in the commodity said. Company officials declined to comment.

CRUCIAL FIRST MONTHS
Interest in iron ore futures has bubbled since the world's major miners -- Vale (VALE5.SA: Quote) (VALE.N: Quote), Rio Tinto (RIO.AX: Quote) (RIO.L: Quote) and BHP Billiton (BHP.AX: Quote) (BLT.L: Quote) -- have switched to quarterly from annual pricing.
With global spot iron ore prices heading for $200 a tonne, buoyed by demand from China, the world's biggest buyer, exchanges are vying for business in a physical market second only in size to crude oil.
Up until Saturday's launch, investors have only had forward swaps or cash-settled derivatives available to hedge risk.
"The first six months would be crucial to judge whether this (contract) would be of any help, there are chances that it might turn out well," said Gnanasekar Thiagarajan, director, Commtrendz Research.
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.

Singapore Mercantile Exchange (SMX) is sticking to its planned launch of a futures contract in the second quarter. [ID: nL3E7CQ09W]
"Our product strategy timelines are not altered and remain on course as planned," Thomas McMahon, chief executive of SMX, told Reuters in a email.
"The marketplace understands the differences well. We see SMX iron ore futures as more reflective of trans-Asian, Australian and Brazilian demand and supply pricing mechanisms," he added.
SMX, controlled by India's Financial Technologies (FITE.BO: Quote), is looking at establishing a cash-settled iron ore futures contract based on the iron ore index by data provider Metal Bulletin which uses a 62 percent iron content benchmark. (Additional reporting by Manolo Serapio Jr in Singapore;editing by Jo Winterbottom & James Jukwey, sourced Reuters)

ICEX iron ore March 2011 contract prices were up 1.20% to trade at Rs 8,069 per tonne

Indian Commodity Exchange (ICEX) on Saturday launched iron ore futures contract along with Multi Commodity Exchange.

ICEX iron ore March 2011 contract prices were up 1.20% to trade at Rs 8,069 per tonne while April 2011 contracts also traded at Rs 7,628 per tonne. The contract will be on monthly expiry basis with a trading unit of 100 dry metric tonne (DMT). The delivery unit is 5,000 DMT. In the international markets, the spot Australian benchmark iron ore price hit $ 185 per tonne on Friday while Indian iron ore price with 63.5% iron content was quoted at $190 per tonne.
Total volume of all the three contracts March, April and May 2011 was 246 lots (24,600 tonne) valued at Rs 19.50 crore on the first day of trading.

“Based on the run up to launch of Iron ore contract, trade volumes on first day of trade on ICEX were robust with good participation and liquidity seen in its March and April contracts,” Sanjay Chandel, CEO, ICEX, said.
“In coming days we will see more physical market participants using ICEX platform for effective risk management and hedging activities. This is possible due to our contract meeting international standards and transparency in price discovery,” he said.

Indian iron ore futures may be cash-settled-source

Indian iron ore futures may be cash-settled-source
Cash-settled contract may be benchmarked to TSI
* Exporters, traders unlikely to rush in to hedge
* Chinese, overseas firms have shown interest-ICEX (Adds quotes, details, background)
By Siddesh Mayenkar

MUMBAI, Jan 28, 2011 (Reuters) - India's planned iron ore futures contracts are likely to be settled in cash initially and would be linked to internationally acceptable prices, an official said on Friday, but potential players say they would not rush in to hedge on the platform until there is ample liquidity.

Singapore is also looking at a cash-settled futures contract which the Singapore Mercantile Exchange is hoping to launch in the second quarter, in a race with India to establish the world's first futures market for the steelmaking ingredient.
"The contract would closely track acceptable benchmarks like the TSI (The Steel Index)," an official from the Indian Commodity Exchange (ICEX) told Reuters on condition of anonymity.
TSI .IO62-CNI=SI is one of three key providers of iron ore reference prices which global miners Vale , Rio Tinto and BHP Billiton use in setting quarterly contract rates.

SMX, controlled by India's Financial Technologies , was looking at benchmarking its futures contract against the iron ore index of another data provider, Metal Bulletin .IO62-CNO=MB.
India's commodity market regulator, Forward Markets Commission, on Tuesday approved plans by ICEX and the Multi Commodity Exchange (MCX) to launch four iron ore futures contracts. ICEX said it was looking at launching in a month's time.

India is the world's third-biggest iron ore exporter after Australia and Brazil, although its shipments have dropped for a sixth straight month in December because of 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.
But India's iron ore exporters said liquidity would be a key consideration before they hedge on the futures platform.
"It's a fear that prices may not fluctuate on an intra-day basis, which may put speculators off and take away liquidity from the market and hamper corporate participation initially," said another source with ICEX.

ACCEPTABLE BENCHMARK
Futures contracts would be in addition to the existing forward swap contracts, launched in 2008, being offered by bourses from Singapore to the United States and Europe to prod steelmakers into hedging price risks after the industry moved to a more flexible quarterly pricing system last April after the collapse of a 40-year-old annual benchmark system.
"We wonder if we would hedge right away or wait to see how soon liquidity enters the market," said Rahul Baldota, executive director with iron ore exporter MSPL, which ships most of its annual output of 2.5 million tonnes to top buyer China.
"We hope liquidity would come in over a period of time after options come on board."
India is awaiting approval from the lower house of parliament to start options contracts, which are likely to lure corporate participants and boost liquidity.
"Few overseas firms have shown interest, and they plan to open a subsidiary here so that they can procure, hedge and export," said Sanjay Chandel, chief executive at ICEX.
The absence of foreign players in Indian commodity bourses is a predominant concern which could further limit liquidity, and restrain its influence as a price setter for the seaborne iron ore market worth around $100 billion in 2010.

India currently bars foreign funds from its commodity exchanges.
"India would take time, say another two years, to become a globally acceptable benchmark and could be much more easier after the entry of foreign players," said ICEX's Chandel.
Chandel said ICEX plans to start roadshows next month to promote the contracts. (souced: reuters)