(Yicai Global) Dec. 4 -- The Dalian Commodity Exchange in northeast China imposed a limit on its most-traded iron ore futures contract yesterday, but forward prices still reached a new high today.
The DCE said daily trading volumes for individual investors and companies that are not members of a futures dealer should not exceed 10,000 lots for the iron ore futures contract 2105. Each lot represents 100 tons of iron ore.
But 2105 extended its gains this afternoon, rising 3 percent to CNY890.5 (USD136.39) per metric ton as of 2.30 p.m. local time.
Driven by expectations for a global economic recovery and the peak winter season for steel storage, iron ore -- the alloy’s main ingredient -- climbed to USD136.75 a ton, the most in seven years, on Dec. 2.
Iron ore prices have an impact on the profits of steel producers. The earnings of steelmakers in the Asia-Pacific region will be hit hard in the year to next March as the Covid-19 epidemic curbed demand and they are unwilling or unable to pass on rising costs to customers, according to a new report by Moody’s Investors Service.
Steel companies turn to iron ore futures to manage risk. Corporate client positions accounted for 49 percent of iron ore futures in the first 10 months of this year, a year-on-year increase of 4 percent, according to DCE data.
The DCE plans to look at and introduce measures to cut storage fees and further reduce delivery and warehousing costs while supporting more steelmakers to set up delivery plants and warehouses, officials said.
The exchange will also serve companies to deeply participate in pricing and risk management of iron ore futures, as well as help them to play a role in futures trading and delivery, so as to enhance industrial services in the market.
Editor: Peter Thomas