my country is currently one of the world's largest economies and the world's largest commodity consumption market. It ranks first in the import of commodities such as soybeans, iron ore, and natural gas every year. China's demand has always been a hot spot in the international bu

my country is currently one of the world's largest economies and the world's largest commodity consumption market. It ranks first in the import of commodities such as soybeans, iron ore, and natural gas every year. China's demand has always been a hot spot in the international bulk market.

However, in the long-term international trade and trade, massive procurement has not brought much help to Chinese buyers in bargaining. Instead, it has become the target of international capital attacks again and again. Just over four months after the London nickel short squeeze incident in March this year, another international giant has set off a wave of longing in the iron ore futures market with the largest import volume in my country.

data shows that in order to allow trading participants to hedge risks in the iron ore spot market, four exchanges around the world, including the Chicago Mercantile Exchange, the Singapore Exchange, the London Clearing House and the Intercontinental Exchange, launched iron ore swap trading services, but the market transaction size is relatively not particularly large.

But this provides opportunities for foreign giants familiar with the futures market.

It is reported that since mid-July, a foreign giant began to buy large amounts of over-the-counter call options on the Singapore Exchange iron ore swaps on the Singapore Exchange, forcing the market makers who sell the option to hedge risks, will go long swaps to push up commodity prices, including directly purchasing delivery items to hedge future delivery risks.

As mentioned earlier, the iron ore swap market is not active, and this time the purchase volume of foreign capital is as high as 10 million tons, and the contract amount is roughly 1 billion US dollars, which directly pushed the price of iron ore swap in March from US$96 to US$119, an increase of 23%, which led to a sharp rise in domestic iron ore futures prices. The main contract of domestic iron ore futures rose by more than 7% on Friday, and the cumulative increase in the past five trading days exceeded 20%.

But in fact, as the world's largest iron ore import market, although China's current domestic steel consumer market has a recovery momentum, it is not enough to support the sharp rise in iron ore prices. Moreover, the rise in iron ore prices may have a suppressive effect on the recovery of our demand in the future.

What is more noticeable is that the news said that the call option execution prices bought by the foreign capital are mostly concentrated between US$105-115, and most of them are contracts in recent months. On Friday, the price of the iron ore futures of the SGX in August has exceeded US$120/ton, the price of the bullish contract for US$115 is the highest at US$5 per piece, and the price of the bullish contract for US$105 is more than US$15 per piece.

Based on this, some analysts pointed out, "This is equivalent to buying over-the-counter options, forcing futures companies to help them leverage and go long, which has amplified profitability effect."

And the big traders who started to try to short the spot pressure index on the Platts MOC platform last week have been hit hard by this kind of controlled buying and are unable to fight back.

In fact, we found that as early as 2018, "Letter from an ordinary practitioner in the steel industry to the leaders of the China Iron and Steel Association" was circulated on the Internet, pointing out that iron ore prices have fluctuated abnormally under the current sluggish demand, which is suspected to be speculation by foreign capital.

This time, foreign giants bought a large number of call options, and some market participants believed that there is a conspiracy theory. But there is another view that global iron ore trades in one year is 1.7 billion tons, and 10 million tons of deep out-of-value options are difficult to manipulate the market. Currently, my country's Dalian futures holdings have 1.3 million lots, and even Delta has only 100,000 lots of 10 million tons of iron ore, which is far from the level of reverse market manipulation.

. A survey of relevant domestic traders from Cailianshe shows that iron ore prices have indeed risen at present, but the increase has not yet exceeded the normal market fluctuation range. At the same time, since a large amount of iron ore locks in price in advance, pays first and then ships goods, it will not have much impact on the current market.

Some people are more optimistic that as my country begins to settle iron ore with RMB, the situation of high-priced import of iron ore may gradually become a thing of the past.