Posted on 30 Mar 2022
Dalian Commodity Exchange (DCE), headquartered in Northeast China's Liaoning province, has informed its members that it will lift speculative trading margins and trading fees for a couple iron ore futures contracts from March 30.
According to a notice released by DCE on late March 28, the bourse will raise the intraday and non-intraday trading fees for the most-traded iron ore September contract from 0.01% of daily trading turnover to 0.04% and 0.02% since Tuesday night – the start of the trading session of March 30.
Moreover, DCE will also adjust speculative trading margins for iron ore contracts for May and September deliveries up to 15% from the current 12% starting the settlement of March 30. Meanwhile, the exchange will keep the two contracts' price limits and trading margins for hedging purposes unchanged at 10%.
DCE's latest measures were introduced with the marked price uptick in these two iron ore contracts recently, even though actual demand for iron ore remained tepid in the spot market, Mysteel Global noted.
In fact, the most-traded iron ore September contract has rallied substantially over the past several trading sessions, with the price hitting a recent new high of Yuan 882.5/dmt ($138.5/dmt) during the daytime session on March 28 before closing at Yuan 870/dmt, or up Yuan 37/dmt or 4.5% from the settlement price on March 25.
Meanwhile, the near-month iron ore contract for May delivery also surged to a recent new high of Yuan 890.5/dmt on March 28.
However, the rise in iron ore futures prices had more to do with strong market expectations on the demand recovery in near future, even though actual demand for iron ore and buying from Chinese steelmakers had been relatively subdued for now – steelmaking raw material deliveries via trucks were largely disrupted in many areas of China amid the latest upsurge in COVID-19 cases, Mysteel Global learned from market sources.
"The market had expected the production resumption among steelmakers with the close of 2022 Winter Olympic and Paralympic Games and the end of winter heating season, even though such expectations were dampened by the new coronavirus outbreak. But once the pandemic is to be brought under control, Chinese steelmakers may pick up production, and their demand for iron ore will be boosted by then," a Zhejiang-based analyst with an iron ore trading company in East China remarked.
"Meanwhile, the market had also expected more measures to be introduced by China's central government to further stimulate the national economy, as the intensified COVID-19 containment measures imposed on many regions across China might dampen the country's overall economic growth this year," he added.
Source:Mysteel Global
