On June 2, Dalian Commodity Exchange (DCE) held a meeting to discuss the adjustments to the delivery quality standards for the iron ore futures contract. Nearly 20 representatives of steel mills and iron ore trading companies attended the meeting. Discussed at the meeting were the directions and measures for the revision of the delivery quality standards for the iron ore futures on DCE.
Chen Wei, director of the industrial product business department of DCE, said that recently great changes have taken place in the spot market of iron ore, as the high and low grades of iron ore has seen the difference of prices expanded continuously and the non-mainstream iron ore products have taken advantage of low prices to enter the process of futures delivery. The situation has affected the representativeness of the iron ore futures prices to some extent and is not conducive to corporate clients organizing follow-up production and operation. In this context, DCE plans to adjust the delivery quality standards for the iron ore futures, so as to make relevant standards more adaptive to the iron ore spot market. In terms of the directions for the adjustments, we hope to try to keep the standards of the futures premiums and discounts in line with the actual price spread between different ore products in the spot market by making comprehensive analysis on the delivery quality inspection reports and data provided by factory warehouses for over 20 iron ore products.
According to the attendees, the adjustments are advanced in a timely manner, and the directions for the adjustments are based on the actual situations, which is of great importance for strengthening the confidence in the market. A market participant pointed out that with satisfactory profit, the corporate clients generally hope to purchase the mainstream high-grade iron ore with higher input-output ratio. With three years of stable operation of the iron ore futures, the market turnover of the mainstream ore can fully meet the delivery demand in the market. By adjusting the premiums and discounts and narrowing the scope of the delivery brands, the delivery of the mainstream iron ore products will be enhanced. The attendees expressed their support and put forward constructive opinions on the adjustments. Chen said that on the basis of extensively soliciting and listening to the comments in the market, DCE will timely adjust the delivery quality standards for the iron ore futures so as to meet the corporate clients’ demand in operation.
In addition, the designated delivery factory warehouses of DCE for the iron ore futures collectively proposed to jointly safeguard the representativeness of the posted prices, to deliver the mainstream ore products well received in the market, to avoid the delivery of the non-mainstream ore ill-received in the market for the purpose of improper benefits, which can affect on the iron ore futures prices.
