Iiron ore derivatives trading slows in 2017
Trading in dollar-denominated iron ore derivatives fell by 9pc from a year earlier to 1.72bn t in 2017, while yuan-based iron ore futures trading volumes on China's Dalian Commodities Exchange dropped by 4pc over the period.
Dollar-denominated iron ore futures are mostly traded on the Singapore Exchange (SGX) and the CME. Volumes of such contracts hit a 12-month low in December at under 100mn t.
Price volatility and a lack of clear price direction encouraged traders to take fewer positions last year.
A consolidation of physical and financial iron ore indexes has so far not provided a boost to trading, contrary to expectations that the removal of basis risk would encourage more hedging by physical market participants.
Volumes of dollar-denominated coking coal derivatives more than doubled last year to 15.3mn t. The introduction of coking coal options, the entrance of more market participants and market making by financial institutions helped boost volumes. The SGX accounted for the largest share of trading activity in 2017, unlike in 2016 when CME was dominant.
Ferrous scrap recorded the most emphatic derivatives growth. Trading volumes on London-based metals exchange LME rose around six-fold in 2017 to 3.07mn t.
International finished steel futures contracts failed to gain traction last year, with only one such contract, US hot-rolled coil on CME, totalling around 1.3mn t last year, up by 17.3pc.