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The 19th China International Steel & Raw Materials Conference is held in Qingdao on September 26-27. During the activity, Wang Fenghai, CEO of Dalian Commodity Exchange (DCE), meets the representatives of Vale, BHP, and Rio Tinto respectively.
Wang Fenghai introduces the functioning of DCE iron ore futures since its listing. He points out that since the internationalization of Dalian iron ore futures on May 4, 2018, the price forming mechanism has become more reasonable, the market’s recognition on the futures price has increased year by year, the basis trading based on iron ore futures price has been carried out, and international mines are welcomed to involve in the DCE iron ore futures markets.
All representatives say that they’ve paid great attention to the DCE iron ore futures market and fully acknowledged the futures market’s role in iron ore pricing. At present, the terminal clients in China of each mine have gradually involved in the basis trading based on iron ore futures price, which has urged international mines to pay attention to Dalian iron ore futures and start to explore the pricing and selling modes based on futures. And they say that they will intensify the connection with DCE and strengthen the efforts on researching the practice of iron ore futures trading and basis trading.
Active participation of overseas traders and increasingly improved market structure have been seen since the internationalization of the DCE iron ore futures. Till the end of August 2019, 156 overseas clients from 14 countries and regions such as Hong Kong, Singapore, United Arab Emirates, Taiwan, Switzerland, New Zealand, the U.K., Japan, Australia, Malaysia, France, Monaco, Cayman Islands and Mauritius have opened accounts, and 95 overseas clients have involved in the trading. The basis trading based on iron ore futures price has been carried out in recent years. The iron ore spot basis trading volume was no more than 5 million tonnes in 2017; it rose to 10 million tonnes in 2018; and the trading volume in the first half of 2019 has already equaled the total volume in 2018.
