Volatile prices, winter freeze may cut volumes on top China iron ore trading platform
China’s largest physical iron ore trading platform expects its trade volumes, affected this year by volatile prices for the steelmaking commodity, to recover in 2018 and reach 100 million tons in the next five years, its president said.
Volume traded on the Beijing Iron Ore Trading Center Corp (COREX) could breach 30 million tons this year, said You Song, but may be lower than the 35.35 million tons recorded in 2016.
“Trading was more active when prices went up... and traders normally hold their steps when prices fall,” You said.
Iron ore for January delivery on the Dalian exchange had tumbled as much as 4.27 percent to 448 yuan per ($64) ton during afternoon trading on Thursday.
“Iron ore fundamentals are not good,” said Zhao Xiaobo of Sinosteel Futures in Beijing. “Imports will rise in the fourth quarter and the environmental restrictions on steel mills are reducing iron ore demand.”
Planned steel production cuts in China during winter may also reduce trading volumes, You said.
Chinese steel mills will face output curbs of as much as 50 percent from November through March as part of the Chinese government’s war against air pollution.
“The environmental inspection and output cutbacks in winter may have some impact on iron ore trade volumes,” said You.
But he said he was confident that trading volumes at COREX would rise to 40 million tons in 2018 and to 100 million tons over the next five years, with its membership widening and with global miners likely to increase transactions via the platform.
COREX, where cargoes from top iron ore suppliers Vale, Rio Tinto and BHP Billiton are among those changing hands, is considering including more products such as coking coal and copper.