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Iron ore options, the 7th commodity options product in China, is officially listed for trading on Dalian Commodity Exchange (DCE) on December 9. The listing of iron ore options will further enrich the derivatives instrument system in China and has important significance to boosting the derivatives market to deeply serve the iron and steel industry and facilitating the construction of an international iron ore pricing center.
Iron ore, an important raw material for iron and steel, is crucial to the development of the iron and steel industry in China. China is the largest iron and steel producer and the largest iron ore importer and consumer in the world. Affected by the changes in the domestic and overseas macroeconomic situation and the de-capacity and de-leveraging of the iron and steel industry in recent years, the iron ore spot price has presented frequent fluctuations.
Iron ore has shown outstanding performance since the beginning of this year. The Platts iron ore index price rose from the average USD 72 / tonne in January to the record high of USD 126 / tonne in July, up by 75% in the first half of this year. In this context, the industry chain enterprises have had increasing demand on listing iron ore options and diversifying the iron and steel risk-avoiding instrument system.
The underlying of iron ore options are iron ore futures. The iron ore futures market has shown stable and orderly operation and increasingly improved structure since the listing of iron ore futures in October 2013, and more than 1,200 iron and mining enterprises have deeply taken part in futures trading. DCE statistics show that in the first 10 months of this year, the open interests of corporate clients accounted for 45%, up by nearly 5 percentage points year-on-year.
The iron ore futures ushered in overseas traders in May 2018, attracting over 170 overseas clients from 15 countries and regions, and its international influence has kept increasing. Currently, the Chinese iron ore futures has developed into the largest iron ore derivatives in the world and has distinct advantages in terms of its market scale, industry participation and international influence, offering a good market basis for the listing of iron ore options.
DCE Chairman Li Zhengqiang said that the listing of iron ore options has made iron ore the first product complete with futures, options and swaps and connect the futures and spots markets as well as the domestic and overseas markets.
