Strong interest from China and India boosted iron ore futures trading at the Singapore Mercantile Exchange (SMX) in February, reaching a record volume of nearly 1.5 million tonnes.
The SMX said the Metal Bulletin Iron Ore (MBIO) Index Futures Contract (SMMBIO) crossed a volume of 1,479,800 tonnes, a new peak since the launch of this contract on August 12, 2011.
Iron futures valued at $213.37 million were traded in February in 14,798 lots. Futures are a financial contract obligating the buyer to purchase an asset (or the seller to sell an asset) at a predetermined future date and price.
Active interest from the physical market, especially importers and steel mill owners from China as well as exporters and miners from India, has supported the iron ore futures contract to reach these levels in just over six months after it was launched, said the SMX.
Mr Prakash Shah, President, Metals & Energy at SMX said, “The SMX Iron Ore (futures) contract is attracting a lot of interest from industry players and the steady growth in trading volumes is a testimony to that.”
He added that the growing success of this contract will not only strengthen Singapore’s position as a major iron ore trading hub, but also help create a robust benchmark for the industry.
The contract has seen an enthusiastic response since its debut, with major physical market and financial market players interested in connecting to the exchange platform to trade the contract, according to the Singapore Mercantile Exchange backed by India’s Financial Technologies.
Traders based in China, the biggest importer and the largest market of iron ore, have shown active interest in the contract as it offers a narrower bid-ask spread, giving better pricing and trading efficiency to iron-ore physical traders and financial players, it said.