The iron ore market has attracted high attention from relevant departments.
On December 6, the China Iron and Steel Industry Association (hereinafter referred to as the China Iron and Steel Association) stated that the recent sharp rise in imported iron ore prices deviated from the fundamentals of supply and demand. There were abnormal bidding by traders to promote the rise in the index and the futures market was approaching the delivery month, which created market tensions, and called on relevant regulatory authorities to intervene as soon as possible. Since then, Dalian Commodity Exchange (hereinafter referred to as Dalian Commodity Exchange) issued an announcement on its official microblog, saying that it has recently launched a "five-in-one" regulatory cooperation mechanism for iron ore and other varieties, and will strictly investigate and crack down on illegal and irregular transactions.
iron ore market has risen sharply this year, with an increase of nearly 50% this year, and has recently seen a white-hot momentum. An industry insider told a reporter from Securities China that the increase in steel mill production this year has driven demand for iron ore, and with supply speculation, there is fundamental support for ore prices. However, the overseas iron ore Platts index has seen an abnormal surge in recent times, and there is a possibility of being artificially manipulated; a large multinational trader in the spot market has mastered most of the goods rights of the lowest futures delivery products, thereby raising the price of the delivery products; the futures market also has a trend of main force forcing positions, and the abnormal movements of the seats of a foreign futures company are particularly eye-catching.
China Iron and Steel Association: The sharp rise deviates from the fundamentals, and the regulatory authorities intervene as soon as possible
According to the official website of the China Iron and Steel Association, Luo Tiejun, vice president of the China Iron and Steel Industry Association, said in an interview with reporters on the 6th that the recent sharp rise in imported iron ore prices exceeded industry expectations, which further increased the risk of the industry's operation, which was not conducive to the stability of the industrial chain and supply chain.
Luo Tiejun said that according to the situation in the China Iron and Steel Association, the recent sharp rise in imported iron ore prices deviate from the fundamentals of supply and demand. There are abnormal bidding by traders to promote the rise in the index and the futures market is approaching the delivery month, which creates market tensions, and calls on relevant regulatory authorities to intervene as soon as possible. He also pointed out that it is urgent to implement the dynamic promotion and discount system of iron ore futures brand that is close to market changes, which will help steel companies better use futures tools to control risks.
major commodity exchanges: Launching the "five-in-one" regulatory cooperation mechanism
After the China Iron and Steel Association called out, the major commodity exchanges issued an announcement on its official microcomputer on the evening of December 6, saying that it would implement the "zero tolerance" requirement. Recently, the exchange has launched a "five-in-one" regulatory cooperation mechanism for iron ore and other varieties to exert the joint force of supervision, strictly investigate market trading behaviors, and severely crack down on illegal and irregular trading behaviors.
"Five-in-One" regulatory cooperation mechanism is unique to the Chinese futures market. The "five-in-One" includes the China Securities Regulatory Commission, the Securities Regulatory Bureau, the Futures Exchange, the China Futures Market Monitoring Center and the China Futures Industry Association. This regulatory system played an important role in the development of China's futures market in the past.
It is worth noting that for iron ore futures, the Dalian Commodity Exchange has successively introduced a number of regulatory measures. On December 4, the Dalian Commodity Exchange issued a "Market Risk Warning Letter" for iron ore, saying that "the iron ore market price fluctuates greatly recently. All member units are requested to strengthen investor education and risk prevention work, and remind customers to participate in futures trading rationally and comply with regulations. Our firm will continue to strengthen daily supervision, seriously investigate and punish all kinds of violations, and maintain market order."
The day before, the Dalian Commodity Exchange announced the implementation of trading limits on the iron ore futures I2105 contract. Starting from the trading hours on December 7, 2020 (i.e., the trading hours on December 4, the opening of positions by non-futures company members or customers on the Iron Ore Futures I2105 contract shall not exceed 10,000 lots per day. The single-day opening volume refers to the sum of the number of buying and selling opening numbers on the iron ore futures contract that is not a member of the futures company or a customer on the day. The number of positions opened in hedging trading and market making trading is not restricted. Accounts with actual control relationships are managed according to one account.
At the same time, in order to cool down the market, the Dalian Commodity Exchange also lowered the maximum price limit for iron ore delivery warehouse delivery costs.Among them, the maximum price limit for car delivery fees was reduced from 10 to 15 yuan/ton to 8 yuan/ton, the maximum price limit for train delivery fees was reduced from 20-23 yuan/ton to 8 yuan/ton, and the maximum price limit for ship delivery fees was reduced from 25-44 yuan/ton to 12 yuan/ton (excluding port construction and port fees).
iron ore prices are accelerating and soaring
iron ore market has been very popular recently, and the futures and spot prices are continuing to rise.
On December 4, the iron ore Platts index rose by US$7.5/ton in a single day, breaking through US$145/ton in one fell swoop, an increase of more than 50% from the beginning of the year, setting a new high in the past eight years.
In the futures market, iron ore futures have risen sharply, and the latest risk control measures launched by the exchange will not have much impact in the short term. During the trading session on Friday, the Dalian Commodity Exchange iron ore futures continued to rise, with the main I2101 contract rising to a maximum of 993 yuan/ton, which hit a record high since its listing in 2013, and the absolute price approaching the thousand yuan mark. The latest price of I2105 is 916 yuan/ton, up 4.51% from the settlement price of the previous day, and the increase in the far-month contract is even more astonishing.
Industry insiders suspect that there is something behind it
"There are many reasons for the sharp rise in iron ore market prices. The main mine Vale's production target next year is low, and the supply and demand pattern is tight. However, the overseas swap prices have soared recently, and the import profit has been inverted by more than 100 yuan. Platts was also bought by traders. The foreign market has some feeling of being charged, so it should be checked." A relevant person in charge of an iron ore trader said.
Another industry insider revealed more information to the reporter.
"From the fundamental point, the demand this year is too good and steel mill output has increased, so the demand for ore has increased significantly. There is a trend of some major force pushing positions in the futures market, but the current market price is still discounted spot. The main force operates particularly well this time. He first pulled the Platts index higher in the foreign market. Platts index is jointly priced by China and overseas. There is indeed a possibility of artificial manipulation. There is a problem here. Platts index higher has caused losses in imported ore, so domestic traders are rushing for goods." The industry insider said.
As for the futures market, he said that the large number of long positions in JPMorgan futures seats are particularly eye-catching, but it can only be said that this may be related to the rapid rise. From the perspective of investment operations, it is difficult to say whether there are any violations, and further investigation by regulatory authorities is needed.
In addition, there are rumors in the industry that the sharp rise in iron ore futures prices is related to a multinational trader. "This large multinational trader has controlled the spot price of iron ore minimum delivery products in his hands, objectively increasing the price of delivery products." Some institutional sources pointed out.
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