The bill of lading delivery system pioneered by Dalian Commodity Exchange (DCE) will be first implemented on Contract I1405, i.e., the iron ore futures contract to be expired on May 2014. DCE received on April 15 the first batch of buyer intention applications for bill of lading of iron ore, with 800, 400, and 400 contracts at Rizhao Port, Lianyungang, and Qingdao Port, respectively.
A bill of lading is a certificate for physical delivery issued by a seller to a buyer after the buyer confirms compliance upon acceptance of goods and the port where the goods are stored confirms the transfer of real right. According to a DCE official, due to the lower unit value of iron ore, the same delivery costs will have greater impact on iron ore futures. If the delivery costs are too high, the willingness of buyers and sellers to deliver iron ores will be reduced, which as a result will influence the price convergence of futures and commodities, discourage price discovery and cut down hedging efficiency. To lower the futures delivery costs and improve market efficiency, DCE designed the bill of lading delivery system based on actual trade processes. Compared with the traditional warehouse receipt delivery, the bill of lading delivery allows buyers to choose delivery locations, which enables direct connection between buyers and sellers for picking up goods. All this will significantly save the money for delivering goods into and loading goods out of the warehouses, as well as the expenses for transportation and reverse logistics, thus enhancing market efficiency and better serving the real economy.
Investors intending to participate in the bill of lading delivery may submit their intent applications through the electronic warehouse receipt system from the 10th to the 14th trading day of the month before the delivery month. They can also inquiry about the intended ports of the bill of lading submitted by the buyers and their matched information in the sub-column Market Statistics under the column Market Data on the DCE’s official website.
