Dalian iron ore contract boosts overall market liquidity

The Dalian Commodity Exchange saw the first delivery of its iron ore contract this month – does the success of the onshore China contract threaten Singapore Exchange’s pre-eminent position in the iron ore swaps market, and how will both be impacted by the Shanghai free trade zone?

March 19 saw the delivery of 20,000 tonnes of iron ore in a deal between two Chinese trading companies. Although those figures are small beer for the sector – mining major Glencore Xstrata alone sold 33.2 million tonnes of iron ore in 2013 – it marked the first physical delivery for the iron ore swaps market on the Dalian Commodity Exchange (DCE).

Dalian launched the contract on October 18 last year, enjoying initial success, with total first-day trading volumes roughly equalling Glencore