Published On: Wed, Mar 7th, 2012

SMX Iron Ore Contract Sets a New High

The world‟s first and only global Metal Bulletin Iron Ore (MBIO) Index Futures Contract (SMMBIO) traded 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 on August 12, 2011. The total volume traded in February was 14,798 lots valued at USD 213.37 million.

Active interest from the physical market, especially importers and steel mill owners from China as well as exporters and miners from India, has supported the iron ore futures contract to reach these levels in just over 6 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 biggest 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 index futures contract on a global platform, settled based on the Metal Bulletin Iron Ore (MBIO) Index of 62% iron ore, CFR Qingdao, China. The index is a tonnage weighted calculation of transactions normalised to a base specification using the value-in-use of the material implied by the market, and is constituted of three sub-indices created to balance the market with equal weighting (33.3%) for each sub-index (representing Producers, Traders and Consumers, with only the final index being published) 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.

Mr. Prakash Shah, President, Metals & Energy at SMX said, “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. 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.”

Mr. Cameron Hunt, Director, Metal Bulletin Indices said, “The growing interest and sustained response to the SMX Iron Ore Futures from the time of the launch reaffirms the strength of the SMX – Metal Bulletin Iron Ore Index combination. We have seen a lot interest from China at the recently concluded Metal Bulletin Iron Ore conference in Beijing and expect to see more industry participation in this contract.” The SMX iron ore futures contract offers an easy entry and exit at any point of time to every participant based on their position in the market and price views. The screen based trading system provides transparency and confidence to the market participants.

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