The Singapore Exchange ('SGX') will launch a high-grade iron ore derivative product to be settled against the daily MB 65% Fe iron ore index published by Fastmarkets MB (previously known as Metal Bulletin).
The contract will reference the 65% Fe Brazilian fines index, CFR Qingdao, provided by Fastmarkets MB.
Previously, market participants had no derivatives available to hedge their exposure towards high-grade fines and concentrate.
Robust margins enjoyed by Chinese steel mills since 2017 have resulted in widening gaps across iron ore grades, with demand for high-grade materials being driven by mills’ eagerness to increase productivity and the government’s focus on greater environment protection.
The increasing preference among steelmakers for high-grade iron ore has been described as a "structural change" by global miners.
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