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China Starts Trading Iron Ore Options

9 Dec 2019 2:29 pm
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Mumbai (Commodities Control) - China, the world's top steel producer, started trading iron ore options on Monday, the first industrial option on the Dalian Commodity Exchange, as the country looks to provide more hedging tools for iron ore producers, traders and steel-makers.

The most-active May 2020 iron ore option contract on the Dalian Exchange made its debut with trading volumes at 52,350 lots and saw volatility at around 26%.

The option contract with exercise price of 650 yuan ($92.34) per tonne, closed with a call option at 40.7 yuan per tonne and put option at 38.3 yuan per tonne.

The most-traded iron ore futures contract on the Dalian exchange, for May 2020 delivery, closed up 5.6% at 653 yuan per tonne on Monday.

The jump in iron ore option and futures prices also came amid recovering sentiment, as the government pledged to beef up support for infrastructure projects.

China has been trying to play a more muscular role in pricing for the steelmaking ingredient. After opening its iron ore futures to foreign investors in May 2018, the Dalian bourse added brands deliverable for iron ore futures and started a basis trading platform this year.

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