.jpg)
On October 9, Shanxi Ximei Production Co., Ltd. (“Shanxi Ximei” for short), via Chang’an Futures, and Shandong Huaxin Industry & Trade Co., Ltd. (“Shandong Huaxin” for short), via Galaxy Futures, respectively completed the settlement and payment transfer for the iron ore warehouse receipt of 20,000 tonnes on the Comprehensive Business Platform of Dalian Commodity Exchange (DCE).
Shanxi Ximei, affiliated to Shanxi Coal and Chemical Industry Group, started its iron ore trading business in May this year. As a futures buyer, Shanxi Ximei has taken part in the delivery of Iron Ore 1809 Contract at the settlement price of RMB 488.5/tonne. After delivery matching, it obtained the warehouse receipt of 20,0000 tonnes Indian powder at Rizhao Port. As few of its clients need this kind of iron ore, Shanxi Ximei decided to sell it at site and chose the iron ore warehouse receipt business of DCE as it has engaged in iron ore trading for a short period of time and has limited sales channel in Rizhao.
Shandong Huaxin, a delivery factory and warehouse receipt service provider of DCE iron ore futures, has actively responded to clients’ application for warehouse receipt selling. “Relying on our extensive spot channels in Rizhao, we successfully found the buyer on day of matching and got the profit of about RMB 5 / tonne after deducting all delivery cost. In this way, we are able to get some profit while serving our clients, thus achieving all-win result.” said Lu Chaohui, General Manager of Shandong Huaxin.
At present, clients and service providers have to take part in the warehouse receipt service in the OTC (over-the-counter) market via a futures company. Chang’an Futures and Galaxy Futures are respectively the service providers of the seller and buyer of this warehouse receipt business. Chang’an Futures President Wang Rui said that the iron ore warehouse receipt service can better satisfy the demands of entity enterprises and will assist futures companies in better serving them. An official of Galaxy Futures said that Galaxy Futures has won bidding of the iron ore warehouse receipt service many times for the service providers it acts as an agent, and this business is beneficial for getting through the channel between futures and spot goods, thus providing entity industries with more diversified services through the OTC market.
The iron ore warehouse receipt service provider system, as a key measure for the OTC market construction of DCE, was launched in May 2017. It allows clients to buy or sell warehouse receipts at foreseeable cost, which has effectively improved clients’ delivery capacity, promoted the connection between futures and spot markets, and enhanced the continuity of futures contracts. The iron ore warehouse receipt business has been in smooth operation since its launching, with the accumulative settlement of 150,000 tonnes in 2017 (taking up 20% of the total delivery amount). A DCE official said that DCE will continue to promote the iron ore warehouse receipt business and further strengthen the construction of the OTC derivatives market to meet the individualized demands of entity enterprises.
