Top iron ore trading platform eyes record volumes

Strong steel output gives COREX motivation to hit 38m tons by year-end

Volumes at China’s biggest physical iron ore trading platform may hit record levels this year, with demand for the steelmaking raw material pushed up as steel output has been strong despite pollution-linked curbs, its president said.

Volumes traded on the Beijing Iron Ore Trading Center Corporation (COREX) from January to mid-September have risen 20 percent from the same time in 2017 to 24 million tons, and are on course to beat last year’s total of 33.6 million tons, said company president You Song.

The last quarter of the year is typically the strongest in terms of transactions on the platform, he said.

“Our target this year is 36 million tons, but we have a chance to break 38 million tons,” You told Reuters on the sidelines of an industry conference organized by the China Iron and Steel Association.

That would be a new annual high for the platform that began in 2012 and where cargoes from top iron ore suppliers Vale, Rio Tinto and BHP Billiton are among those sold.

The last record of 35.35 million tons was set in 2016.

Despite production restrictions in many cities including top-producer Tangshan in North China’s Hebei Province, the country’s overall steel output slipped 1.1 percent in August from a record 81.24 million tons in July, as many mills ramped up output to chase strong margins amid firm domestic demand.

“We think production of steel will remain stable, so demand for iron ore will remain stable,” said You.

Iron ore imports by China – the world’s largest buyer – only dropped 0.5 percent to 710 million tons in January-August.

Apart from matching iron ore buyers and sellers on dollardenominated cargoes, COREX also matches buyers and sellers on yuan-priced iron ore at China’s ports and has seen volumes increase from June, You said.

The phenomenon reflected increased interest for smaller shipments from mills and traders, according to You.

From potentially 500,000 tons in traded volumes this year for yuan-denominated cargoes, transactions could reach 2 million tons next year and probably 10 million tons by 2020, You said.

“Once the business takes off in the market, volumes will increase very fast,” he added.