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The CME Group is utilizing The Steel Index (TSI)’s daily iron ore price index published by Platts, a leading global provider of energy, petrochemicals, metals and agriculture information, as the settlement basis for its new iron ore futures contract launching December 8.
“Platts and TSI operate rigorous and time-tested price discovery processes in the physical metals markets,” said Steven Randall, TSI managing director. “We’re pleased that exchanges, such as CME, recognize the benchmark value of our price indices. The new futures contract responds to the growing appetite to manage lower grade iron ore price risk in the physical markets, which continue to evolve from long-term contracts to short-term trading.”
The futures contract, Iron Ore 58% Fe, Low Alumina, CFR China (TSI) Futures, will reflect the value of “58% Fe fines”, or fine ore powder containing 58% iron content, as delivered to China’s Qingdao port on a cost and freight (CFR) basis. The contract listing will be on the CME Globex electronic trading platform, the New York Mercantile Exchange (NYMEX) trading floor and available for clearing on CME ClearPort.
In a November 23 press release announcing the contract and the choice of TSI as the basis for settlement, CME Group said it is aiming to “improve price discovery” alongside market expansion. Settlement prices reflect the averages of TSI’s reference prices published in the expiring month.
TSI, a unit of Platts since 2011, is a leading source of impartial steel, scrap, iron ore and coking coal price information based on spot prices determined between buyers and sellers in the open markets. Find details of the methodology underpinning TSI’s iron ore price indices at this link: https://www.thesteelindex.com/en/procedures-methodology/.
In addition to CME, other exchanges list Platts and TSI-based iron ore, coking coal, steel and scrap derivatives contracts: Singapore Exchange (SGX), LCH.Clearnet, NASDAQ ONX and the Intercontinental Exchange (ICE). The new CME 58% Fe futures contact will complement the existing TSI-based 62% Fe fines iron ore futures contracts which have seen trading volumes globally more than double each year since 2009 to reach approximately 600 million tonnes this year.
Published on a daily basis, the TSI iron ore indices appear in email price reports and online within the TSI Price Analyzer via subscription to TSI’s Global and Iron Ore Services.
For more information on TSI, visit https://www.thesteelindex.com.
