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The China Iron & Steel Industry High-quality Development Summit, supported by Dalian Commodity Exchange (DCE), hosted by the China Iron and Steel Association and the Tangshan Municipal People’s Government, and organized by the Tangshan Iron and Steel Association and Baochunsteel.com, was held in Tangshan lately. Attending the forum were about 600 persons from relevant industry associations, steel plants, trading companies, e-commerce enterprises and financial institutions.
It was learnt that in recent years, increasing fluctuations were seen in iron and steel raw material prices, and enterprises encountered huge challenges in stable operation and high-quality development. And more and more enterprises in the iron and steel Industry chain had involved in the futures market, and combining the futures and spot to hedge against risks had become a tendency in the industry.
A DCE official introduced that from January to September, over 10,000 corporate clients involved in the coking coal, metallurgical coke and iron ore trading. Next, DCE would accelerate the listing of scrap steel and gas coal futures as well as iron ore, coking coal and metallurgical coke options, further add more risk-avoiding products and instruments.
Sufficient liquidity has been seen in the coking coal, metallurgical coke and iron ore futures market, and the participants structure has kept improving. From January to September of this year, the average daily trading turnover of the coking coal, metallurgical coke and iron ore futures of DCE was 1.62 million contracts, and the average daily positions 1.23 million contracts, and corporate clients accounted for 40% of the total open interests. Besides, the coking coal, metallurgical coke and iron ore futures market has been well serving the supply-side structural reform. In recent years, the futures-spot price correlation of coking coal, metallurgical coke and iron ore has been steadily increased, and the basis pricing based in DCE prices has been gradually applied in the steel and coal spot trading.
The improvement in the operation quality of the futures market can be shown in the following four aspects. The first is optimizing contract rules and systems to increase market operation quality. DCE has adjusted the quality standards of coal futures contracts in time according to the changes in the spot market, further improved the representativeness of futures prices, and enhanced the risk-avoiding efficiency of industrial enterprises.
The second is enriching the derivatives instruments system to satisfy enterprises’ individualized risk management demand. Centering on futures products, DCE has actively built the derivatives instruments system covering a full range of products like options, swaps and basis.
The third is innovating the pilot mode to keep exploring the effective ways of serving the real economy. In 2018, DCE carried out the over-the-counter options pilot and the basis trading pilot and actively provided industrial enterprises with new trade pricing modes and risk management instruments.
And the fourth is strengthening the market cultivation to consolidate the basis for market development. From the beginning of this year, DCE has built the industry-finance training base and the EDP training and organized trainings for key steel enterprises such as HBIS Group and Shanxi Iron and Steel Group and their upstream coking coal and metallurgical coke enterprises. In addition, DCE has supported member entities and strengthened trainings for coal and steel enterprises, with the nearly 8,000 person-times trained.
