Singapore's SGX, China Trading Platform to Cooperate on Iron Ore

May 8 - The Singapore Exchange and the operator of China's physical iron ore trading platform have agreed to cooperate, the bourse said, in a move that could increase the influence of the world's biggest buyer over the market.

 

The deal between SGX and the China Beijing International Mining Exchange (CBMX) will involve cooperation in product and market development as well as exploring a medium-term plan to improve the ability of traders to transfer risk between the spot and derivatives markets, SGX said.

 

The Singapore bourse clears more than 90 percent of globally traded iron ore swaps, and CBMX runs China's first physical iron ore trading platform, which was set up a year ago.

 

China, which buys about two-thirds of the world's more than 1 billion tonnes of iron ore seaborne shipments, wants to increase its influence over the pricing of its biggest import commodity by volume.

 

The industry has shifted to spot prices in recent years, with the end of four decades of pricing that was set in annual contracts.

 

SGX said the agreement with CBMX is the first in the global iron ore market between an international derivatives clearer and a Chinese physical spot trading platform.

 

CBMX competes with the globalORE platform in Singapore. which does not have an iron ore cooperation deal with SGX.

 

Global miners BHP Billiton, Vale and Rio Tinto and Chinese steelmakers including Baoshan Iron and Steel are members of both the CBMX and globalORE platforms.

 

SGX cleared a record 109 million metric tonnes of iron ore swaps in 2012, while more than 13 million tonnes of iron ore have traded on CBMX's platform since it opened in May last year.