Floating deals dominate China’s seaborne iron ore trade
OREANDA-NEWS. China's spot seaborne iron ore trade is continuing to shift to floating deals as uncertainty about price direction discourages fixed-price transactions.
Last year, 60.6pc of the 33.62mn t transactions done on China's leading online trading platform Corex were index-linked, while the remainder were fixed-price deals. This was mostly stable from 2016, but continues the major change from 2015 and earlier. Fixed-price deals made up over 70pc of total transactions on Corex in 2015.
Argus in December revised its assessment methodology for ICX, the price for 62pc fines to China, to include floating deals along with fixed-price deals and matched offers and bids. The changes add further depth to the data pool that generates the daily price.
Floating deals become more frequent when prices are falling, Corex said. It pointed to June 2017, which had the highest number of floating deals and the lowest monthly average price.
Most deals on Corex are dollar-denominated, but there are some yuan-denominated transactions for portside ores. Brazilian mining firm Vale reported sales of yuan-denominated portside cargoes on Corex in 2017, but did not give volumes. It plans to increase such sales this year.
Vale is aiming to blend around 100mn t of its BRBF fines in China and Malaysia this year and sell a significant amount of these ores on the yuan-denominated portside market. The company blended around 75mn t last year. BRBF is a blend of 65pc basis IOCJ fines and high-silica southern system fines.