China's Iron and Steel Association Calls for Iron Ore Producers to Cut Production to Stabilize Market
According to Oilprice.com, Iron Ore prices dropped to a ten-month low on 1st April 2024. The prices for the crucial steel-making raw material tumbled by 3.9% to $96.25 per ton on the Singapore Exchange during early trading, before staging a recovery. This downturn follows a tumultuous previous quarter, during which investors grappled with the repercussions of weakened demand from China's real estate sector.
The sudden decline can be traced back to a warning issued by The China Iron and Steel Association (CISA) the previous week. The association highlighted the impact of the property downturn and subdued infrastructure activity on steel demand, leading to a decline in the steel industry's purchasing managers index for March 2024 to 44.2, the lowest since May of the previous year.
The onset of the second quarter in Asian markets saw iron ore prices undergoing significant fluctuations. Reports indicate sharp declines followed by rapid recoveries, driven partly by holiday-affected trading conditions. Calls from China's steel industry association for producers to curtail production, coupled with iron ore stocks hitting a two-year high at 45 major Chinese ports, contributed to market instability.
During the Easter break, the price of 62% Fe Fines on the SGX iron ore platform plummeted by over 5%, from $101.04 per ton to a low of $95.60 per ton at the opening. However, prices gradually rebounded after hitting a low of $95.40 per ton, eventually climbing back up to $101.65 per ton.
Could Chinese Steel Mills Contribute to Market Stability?
Oilprice.com also reported that the China Iron and Steel Association (CISA) continues to stress the significance of proactive measures by steel mills to maintain balance in the market. For instance, the organization has recommended that Chinese steelmakers synchronize their steel production schedules with steel sales and business performance while prioritizing high-quality and efficient development. Additionally, it has urged major steelmakers to take the lead in efforts to reduce ineffective supply to facilitate the smooth operation of the domestic steel market.
Furthermore, CISA has advised Chinese steel mills to remain vigilant about market fluctuations and enhance the management of their sales channels to prevent instances of low-price dumping and unhealthy competition.
Regarding the current state of China’s steel and Iron Ore demands, CISA has acknowledged that it has peaked and highlighted the evolving structure of steel demand amid efforts toward high-quality development. It has proposed that Chinese steel producers carefully monitor and analyze the market, adjusting production pace accordingly. Additionally, it has urged the prompt reduction of steel inventories to achieve a dynamic balance between supply and demand.
Exchanges to Trade Iron Ore Futures
Iron ore is a vital raw material in the steel-making industry, which also makes it one of the most actively traded futures contracts in the global futures market. Click to learn more about the 5 Things You Need To Know About Iron Ore Futures Trading and also the Iron Ore Market News for 2022 & 2023.
Traders can trade Iron Ore Futures through Orient Futures Singapore from two main exchanges.
The first is through Singapore Exchange (SGX), where traders can trade multiple types of Chinese iron ore futures in contract sizes of either 100 or 500 metric tonnes across various iron purity grades from 58% to 65%.
The second is through Chinese Dalian Commodity Exchange (DCE). It is the world’s biggest iron ore derivative market. China Iron ore futures contracts here are in lots of 100 metric tonnes and physical delivery can be taken.
DCE Iron Ore Futures Contracts
DCE offers Dalian iron ore futures contracts for traders to hedge against price fluctuations and manage risk associated with iron ore price volatility. The contracts represent standardized agreements to buy or sell a specified quantity of iron ore at a predetermined price and delivery date in the future.
With China being the largest producer of iron ore in the iron ore market, DCE Iron Ore Futures Contracts hold significant influence over global iron ore prices and are closely watched by traders and industry stakeholders alike.
To trade China Iron Ore Futures Contracts from DCE, foreign investors and traders would require an overseas intermediary like Orient Futures Singapore. This can be done either through the QFI China Scheme or Internationalized Products. As a brokerage in Singapore, Orient Futures Singapore is also an indirect subsidiary of Shanghai Orient Futures.
This applies for other commodity futures contracts in other Chinese exchanges such as Rapeseed Meal Futures, Peanut Kernel Futures and PTA Futures from Zhengzhou Commodity Exchange (ZCE), and Crude Palm Oil Futures, Gold Perpetual Futures from Asia Pacific Exchange (APEX).
DCE Iron Ore Futures Contract Specifications
The Dalian Commodity Exchange Iron Ore Futures Contract has the following specifications:
The DCE Iron Ore Contract has a minimum tick size of 0.5 CNY/MT.
Contract months are monthly all year round.
The last trading day of the contract month is the 10th trading day of the contract month.
Dalian Commodity Exchange trading hours are from Monday to Friday, at these trading hours:
9:00 am – 11:30 am 1:30 pm – 3:00 pm (Beijing time)
DCE Iron Futures Contracts symbol: I
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us.
We provide bespoke services to our professional clients, tailored to their corporate and individual needs. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.
