Friday, May 4, 2018

"China opens iron ore market to the world in pricing, image push"

From Reuters, May 3:
* China to allow foreign investors in iron ore futures from Friday
* Trading volumes on Dalian were 20 times global iron ore trade
* But it has become a magnet for heavy speculative trades
* Traders say it should boost arbitrage opportunities with SGX
China opens trade in Dalian iron ore futures to foreign investors from Friday, aiming to boost its pricing clout for one of its top imports and hoping traders will take a market notorious for retail speculators more seriously.

Iron ore is the second commodity China is opening to outside investors after launching crude oil futures in late March. Unlike crude oil, though, the iron ore contract on the Dalian Commodity Exchange (DCE) - launched in 2013 - has a deep pool of liquidity and major Western traders have already had access through local Chinese entities.

With trading volumes last year that reached 20 times global iron ore trade, and 25 times volumes done in rival contracts on the Singapore Exchange, iron ore futures in China regularly sway benchmark spot pricing. Giving foreign investors direct access can only boost that influence.

“DCE will always be a leading indicator. It has been and will always be (because of) the sheer volume of it,” said Kelly Teoh, an iron ore derivatives broker at Clarkson Asia Pte Ltd.

Global commodity traders including Glencore, Trafigura and Cargill already trade Dalian futures via China-registered units, sources with knowledge of their participation say.

Cargill said it has been trading DCE’s iron ore futures since the contract launch, using it as a price reference to manage its own inventory risk...MUCH MORE
Also at Reuters:
Glencore first foreign firm to trade iron ore futures after China opens market

The daytrading Chinese grandmothers appreciate the added volume:
Image result for chinese day traders