Bloomberg reported that trading in iron ore swaps, used to bet or hedge on the future cost of the steelmaking commodity, rose almost threefold to a record this year as prices slumped to the lowest in nearly three years before rebounding.
According to data published on the website of SGX AsiaClear, the Singapore based clearing house, buying and selling of the contracts raised to 111 million dry metric tonne in the year to December 28th from 43.4 million tonne in 2011.
According to Clarkson Plc, the world’s largest shipbroker, about 1.1 billion metric tonne of the raw material were shipped by sea in 2012.
According to data from The Steel Index Ltd, trading in the contracts surged in August and September as the physical price of ore delivered to the Chinese port of Tianjin slid to USD 86.70 a dry tonne, the lowest since October 2009, amid stalling steel demand in the country, the biggest producer. The cost then rebounded, rallying to USD 139.40 by December 28th. It averaged USD 128.26 in 2012, 23 percent less than the prior year.
Its data said that SGX cleared 17.6 million tonne of over-the-counter traded iron-ore swaps in 2010.
Vale SA, the world’s largest iron ore producer, said that this month that it sold 52% of the commodity based on the spot price or the monthly average of the spot price and 32% on a quarterly average price. The industry shifted toward spot cargo sales in 2009 after more than 40 years of setting annual prices.