OREANDA-NEWS. September 02, 2015. Singapore Exchange (“SGX”) is pleased to announce the successful launch of its new Iron Ore CFR China (Lump Premum) derivative contracts on 31 August 2015. A total of 140,000 metric tonnes (equivalent to 8,680,000 dry metric tonne units (“DMTU”)) of SGX Iron Ore CFR China (Lump Premium) Futures and Swaps were brokered by FIS, GFI, SSY, Marex, Straits Financial and cleared on SGX.

The introduction of the SGX Iron Ore CFR China (Lump Premium) Futures and Swaps represents the first iron ore lump derivative products globally, enabling market participants to more effectively hedge their iron ore lump exposures, which has become increasingly important in light of the evolving dynamics of the physical iron ore market. Please refer to Iron Ore Lump – Differentiation Matters.

“SGX has continued to improve their product offerings in the bulk commodities space and the addition of the SGX Lump Premium derivative is another positive step for the enhancement of risk management and market sophistication. Market participants like ourselves now have a tool with which to manage the price risk and volatility of iron ore lump prices. It is a good initiative by SGX,” Shawn Teo, General Manager of Mitsubishi Corporation’s Iron Ore Division said.

“SGX’s Lump Premium contract is complementary to their other iron ore contracts that we use – as the first derivative product on iron ore lump in the market, it provides greater correlation with price movements in the the lump spot market. This allows us to hedge our lump exposure more accurately, which we previously could not achieve through solely using other iron ore derivative products,” Ralph Yang, a trader from H&CS Holdings said.

“The liquidity seen on the first day of the contract launch is attractive to participants like us who are looking for an efficient way of hedging our iron ore lump exposure. We look forward to SGX growing the liquidity of the contract even further for us to achieve even greater hedging efficiency through tighter spreads, “ Lu Ming, Vice-President of China-based Ningbo Group said.

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