The world’s first and only global Metal Bulletin Iron Ore (MBIO) Index Futures Contract (SMMBIO), which trades on the Singapore Mercantile Exchange (SMX), crossed a volume of 1,479,800 tons in February 2012, marking a new high since the launch of this unique contract August 12, 2011. The total volume traded in February was 14,798 lots valued at $213.37 million.
Active interest from the physical market, especially exporters and miners from India as well as importers and steel mill owners from China has supported the iron ore futures contract to reach these levels in just over six months after it was launched. The contract has seen an enthusiastic response since it went live for trading, with major physical market and financial market players interested to connect to the exchange to trade the contract. Traders based in China, the largest importer and the largest market of iron ore, have shown active interest in the contract as it offers a narrower bid-ask spread giving better pricing and trading efficiency to the iron ore physical traders and financial players.
SMMBIO is the world’s first and only Iron Ore Futures Contract on a global platform, settled based on the MBIO Index 62% Iron Ore, CFR Qingdao, China. The index is a tonnage weighted calculation of transactions normalized to a base specification using the VIU of the material implied by the market. The Index is constituted of three sub-indices to balance the market with equal weighting for each sub-index (producers, traders and consumers) and is calculated daily. Metal Bulletin’s MBIO Index is an independent and robust reflection of the seaborne merchant market for sinter fines delivered to China.
“The SMX Iron Ore Futures contract is attracting a lot of interest from industry players and the steady growth in trading volumes is a testimony to that,” said Prakash Shah, president, metals and energy, SMX. “The growing success of this contract will not only strengthen Singapore’s position as a major iron ore trading hub, but also help create a robust benchmark for the industry.”
“The growing interest and sustained response to the SMX Iron Ore Futures from the time of the launch reaffirms the strength of the SMX-MBIO Index combination,” said Cameron Hunt, director, Metal Bulletin Indices. “We have seen a lot interest from China at the recently concluded MBIO conference in Beijing and expect to see more industry participation in this contract.”
SMX said the contract offers easy entry and exit at any point to every participant based on their position in the market and price views, and the screen-based trading system provides transparency and confidence to the market participants.
SMX is a pan-Asian multi-product commodity and currency derivatives exchange situated in Singapore. It is backed by Financial Technologies (India) Ltd., which has successfully established 10 exchanges across India, Dubai, Singapore, Africa, Mauritius and Bahrain.
More information is available at www.smx.com.sg.