Financial Times Germany / 25.03.2010) About decades fiddled mining companies with steel concerns behind closed doors from prices for iron ore. The changes now: London is the first trading platform at the start. A new reference is created. With the start of an electronic trading platform for the first time there will be transparent prices and derivatives in the trade of iron ore . Currently there is no accurate price mechanism." Eoghan Cunningham, CEO of this week launched platform Globalore, said "We do believe that real transactions on a transparent basis will help us to develop such a". Globalore mining companies such as Rio Tinto and BHP Billiton are behind it. Headquarters is in London. Idea is attracting buyers and sellers through standardized contracts - and thereby provide a liquid deal. Similar managed the company already with the the coal market platform Globalcoal. To repeat the success now CEO Cunningham said: "We assume that we can start in the third quarter at the latest." "Until then, we will boost not electronic trade." The iron ore market is facing major changes. For 40 years, lengthy negotiations between mining companies and steel manufacturers set prices. The first prize to be a mine operator agreement with a customer, is for reference, followed by the rest of the industry for a year. But providers are very briefly promote a system change: the great industry - such as Rio Tinto, BHP Billiton and Vale - with Japanese steel cookers provisionally agreed to switch to quarterly fixed prices based on the price paid on the spot. Japanese steel concerns have already accepted such a system in conjunction with coking coal. With the change mine companies want to benefit from higher prices that now paid on the spot: currently a ton costs here about 147 $. For comparison: in the contracts for the year 2009 / 2010 ending March is priced at 60 $. That is good to investors: the share of Rio Tinto closed Wednesday at the highest level since Septemb er. Resistance of steel companies from Europe and China is crumbling. Xu Lejiang, Chairman of Baosteel, said the price determination system must be adapted and improved. Because the price for iron ore steel prices - and ultimately affects the cost of everyday objects, the negotiations are the most important in the commodity sector. Globalore takes advantage - of the new developments and to accelerate towards a new pricing system. There is no stock exchange, but primarily Broker. This means: it will give first bilateral transactions. Three standardized contracts traded electronically in the future and which also published quotations recorded are innovative. It is the variety FOB West Australia with location in Dampier, Port Headland or Cape Lambert and two contracts CIF China, are met in Rizhao, Qingdao and Lianyungang. A centralized clearing is not planned. The platform is supervised by the British FSA financial supervision. Still not fixed, how many players will take part in the trade. CEO Cunningham hopes that iron ore producers, retailers and investment banks first will move. "We got together us with a number of major producers and distributors." To support our initiative. "Are we working to win participants." Globalore CEO Cunningham hopes to establish a reference price for iron ore in the long term. On the basis of which, you could then put derivatives to hedge price risks. It was succeeded in the coal market. To the Globalcoal newc index have established as indicative for the coal trade in the Pacific region. To build on a swap deal whose volume now have increased at 200 million tons per year . Cunningham said: "This all can transferred to iron ore. Let's start with an index. "We can leverage swaps and futures on that basis." We will in the medium term go a partnership with a stock exchange to.
(with a little help from bing)
MOL Price at posting:
82.0¢ Sentiment: Hold Disclosure: Held
