China Stimulus Measures
Since the easing of Covid restrictions last year, China's economy has been undergoing a consistent but uneven recovery since the lifting of COVID-19 restrictions in China. However, it still falls short of the government's target of achieving 5% GDP growth for 2023, and a significant part of this shortfall is attributed to the challenges faced by China's real estate market.
To revitalize the struggling Chinese real estate market and strengthen the weakening yuan, the Chinese government decided to introduce a new set of stimulus measures in September 2023. These measures aim to restore confidence in the world's second-largest economy.
Find out the Key Aspects of the New Stimulus Measures here.
Iron Ore and the Real Estate Industry
Iron ore is a crucial raw material in the steel-making industry, playing a pivotal role in shaping the dynamics of the real estate market. As the fundamental building block of our modern world, iron ore is indispensable for the construction of towering structures that define urban landscapes.
The performance of the real estate market significantly influences the demand for iron ore. Surges in construction activities, driven by robust real estate development, increase the need for steel, thereby impacting iron ore prices. Conversely, economic downturns or fluctuations in the real estate sector may lead to shifts in iron ore demand and subsequent price adjustments, making the interplay between iron ore and real estate a dynamic and closely intertwined relationship in the global market.
As one of the most widely traded commodities, iron ore plays a pivotal role in shaping industrial and economic landscapes worldwide. This article delves into the key aspects of iron ore futures from Dalian Commodity Exchange (DCE), including its futures contracts, supply and demand, and price.
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.
Exchanges to Trade Iron Ore Futures
Traders can trade Iron Ore Futures through Orient Futures Singapore from three different 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. Iron ore futures contracts here are in lots of 100 metric tonnes and physical delivery can be taken.
The third is through Hong Kong Exchanges & Clearing Market (HKEX) where they offer Iron Ore Monthly Futures Contracts.
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 a major player 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. Orient Futures Singapore is a broker Singapore company, and 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 DCE Iron Ore Futures Contract has the following specifications:
The DCE Iron Ore Contract has a minimum tick size of 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
Why Trade in DCE Iron Ore Futures?
Iron ore is a critical commodity in the global economy, as it is the primary raw material for steel production. Steel is used in various industries, including construction, automotive, infrastructure, and manufacturing. As a result, iron ore plays a vital role in economic development and industrial growth.
While iron ore is a global commodity with countries such as Australia and Brazil contributing to its supply and demand, China is one country that heavily affects iron ore prices.
China might be only the 3rd largest producer of iron ore, but China’s rapid modernisation and construction growth has seen it emerge as one of the world’s largest consumer and importer of iron ore. According to Statista, China’s iron ore import amounted to over 70% of global iron ore imports in 2021.
These futures contracts are denominated in Chinese Yuan (CNY) and provide valuable insights into the supply-demand dynamics in the Chinese market, which has a significant impact on global iron ore prices.
Stimulus Boost in China Drives Gradual Recovery for Iron Ore Demand
As reported by Yahoo Finance, Rio Tinto Group, the leading exporter of iron ore globally, foresees that the broader Chinese economy will experience a gradual recovery in the current year, propelled by heightened stimulus measures implemented in the country.
China’s economy exhibited signs of stabilization early in the fourth quarter last year, buoyed by increased spending on infrastructure and manufacturing. Rio Tinto expects the recovery in 2024 to be more pronounced in the second half, with the real estate sector continuing to face challenges.
Despite iron ore prices closing 2023 about 20% higher, they have declined about 8% at the start of this year due to concerns about lackluster Chinese demand and challenges in the nation's property sector.
Rio Tinto's iron ore output for the last quarter of 2023 decreased by 2% to 87.5 million tons. However, the company saw growth in bauxite production (up 15%), aluminum (up 8%), and mined copper (up 5%).
Rio Tinto emphasized the need for ongoing investments to sustain its current production levels. The company anticipates that urbanization in India and parts of Asia will drive additional growth, and it expects global iron ore demand to rise nearly a quarter by 2050.
The miner reaffirmed its guidance for iron ore shipments and metals output in 2024. It anticipates exporting between 323 million and 338 million tons of iron ore in 2024 and projects copper production to range between 660,000 and 720,000 tons.
In 2023, Rio Tinto produced 331.5 million tons of iron ore (up 2% from the previous year), while bauxite production remained flat, aluminum output rose 9%, and mined copper edged up 2%.
Rio Tinto's majority-owned subsidiary, Dampier Salt Ltd., entered a sales agreement for the Lake MacLeod salt and gypsum operation in Western Australia, valued at $251 million./
The company also announced plans to invest around $6.2 billion in the development of the Simandou iron ore deposit in Guinea, with first production expected in 2025, faster than most analysts had forecast.
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.
