Iron Ore Trade Boom Shows China Bid for Commodities Clout

(Bloomberg) by Jasmine Ng – China’s bid for greater influence over commodity prices is intensifying as record trade in its iron ore futures dwarfs its nearest rivals. Derivatives volumes on the Dalian Commodity Exchange more than doubled to 18.6 million contracts last month, or 1.86 billion metric tons, bourse data show. Trading in contracts on the Singapore Exchange Ltd. totaled 78.2 million tons. UBS Group AG forecasts global demand at 2.04 billion tons in 2015. The world’s biggest consumer of metals, energy and grains is seeking to tighten its grip over prices with its own contracts for raw materials from tin to coal. While bourses from London to New York maintain a hold on global commodity benchmarks, iron ore traders look to the Dalian market for direction, according to Clarkson Plc, a broker.  “With the high liquidity and the fact that it is in China, everyone looks at it as a lead indicator,” said Kelly Teoh, a Singapore-based iron ore derivatives broker at Clarkson. “The physical traders are watching it.” Dalian’s iron ore futures started in 2013, challenging cash-settled contracts offered by Singapore Exchange, CME Group Inc. and Intercontinental Exchange Inc. Trade in Dalian is restricted to local citizens and … continue reading

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