CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of trading and clearing services for iron ore 62% Fe, CFR China (Platts) swap futures, reflecting changing dynamics in the global ferrous industry. Trading will be available on the New York trading floor. Clearing services will be available through CME ClearPort®, a set of flexible clearing services open to over-the-counter (OTC) market participants to substantially mitigate counterparty risk and provide neutral settlement prices across asset classes. Trading and clearing are scheduled to begin on October 17 for trade date October 18. This contract will be listed by NYMEX and subject to the rules and regulations of NYMEX.
"The ferrous metals industry is one of the largest global commodity markets," said Joe Raia, CME Group managing director of energy and metals products and services. "This contract will complement our existing suite of ferrous, dry freight and international coal futures, and advances our goal of building a complete marketplace for seaborne dry freight products, providing risk management tools across the full ferrous production cycle. In addition, this contract will afford our customers the benefits of capital efficiencies by cross margining against other related products."
"We are committed to bringing greater transparency and efficiency to the global iron ore market through our physical price assessments and information services, and we welcome the futures industry’s recognition of the role we play in the price discovery process in the markets we cover," said Gerald Bueshel, Platts director of global licensing. "This brings the total number of CME Group contracts settled on market price assessments published by Platts to more than 400."
Iron ore is a key raw material used in the production of crude steel. Although abundant and widely extracted, growing global demand, particularly from China, has resulted in growing price volatility.
The commodity code for the contract will be PIO. It will be listed for 24 consecutive months, with November 2010 as the first listed contract month. The contract will be 1,000 dry metric tons in size, with a minimum price fluctuation of $0.01 per tick.
