Platts Iron Ore Assessment Forms Basis of New Singapore Exchange Derivatives

Platts-based Iron Ore CFR China (Lump Premium) Swap and Futures Contracts Launched by SGX Today

Aug 31, 2015, 01:59 ET from Platts

SINGAPORE, Aug. 31, 2015 /PRNewswire/ -- The Singapore Exchange (SGX) is utilizing the Platts 62.5% Iron Ore (Fe) China Spot Lump Premium assessment as the settlement basis for its new swap and futures contracts launched today. Lump iron ore is used in steelmaking.

"We're pleased to be a recognized source of independent price references for the spot physical and futures markets and to play an instrumental role in the iron ore market's continued evolution," said Annalisa Jeffries, associate editorial director of metals markets at Platts. "With the lump premium tending to be 15% to 30% of the total price and spot trading of iron ore increasingly more active, market participants have been eagerly awaiting new derivatives contracts as a means of mitigating physical trading risk through hedging in lump."

SGX's two new Platts-based contracts are: 

  • SGX Platts Iron Ore CFR China (Lump Premium) Swap, reflecting the value of the 62.5% Fe iron ore lump premium expressed over the Platts 62% Fe Iron Ore Index (IODEX) base and delivered on a cost and freight (CFR) basis to Qingdao.
  • SGX Platts Iron Ore CFR China (Lump Premium) Index Futures, reflecting the value of the 62.5% Fe iron ore lump premium expressed over the Platts 62% Fe Iron Ore Index (IODEX) base and delivered on a cost and freight (CFR) basis to Qingdao.

In its August 6 announcement of the derivatives contracts and the choice of the Platts assessment as the basis for settlement, SGX said its aim is "to provide a more effective hedging instrument for iron ore and steel market participants in the global iron ore lump market."

The Platts 62.5% Iron Ore Spot Lump Premium has a price history dating back to May 15, 2013. 

With today's launch, physical price benchmarks published by Platts and its unit The Steel Index are now the basis for settling SGX commodity contracts for steel, iron ore and coking coal, the first of which began in 2008.

Founded in 1909, Platts is a leading global provider of energy, petrochemical, metals and agriculture information and benchmark price references.

For more details on the methodology underpinning the Platts iron ore indexes, visit http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/ironore.pdf.

In addition to SGX, other exchanges feature Platts and TSI-based iron ore, steel, scrap or coking coal derivatives contracts, including: CME Group, LCH.Clearnet and Borsa Istanbul.

Published on a daily basis, the Platts iron ore assessments appear in email price reports and online including Platts' Steel Markets Daily, Platts data and real-time on Platts Metals Alert (PMA) service.

For more information on Platts, visit the website at www.platts.com. For more information on TSI, visit www.thesteelindex.com.

*Platts and its TSI unit do not sponsor, endorse, promote or sell SGX contracts.

CONTACT
Global, Americas: Kathleen Tanzy, + 1 917 331 4607, kathleen.tanzy@platts.com

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of McGraw Hill Financial, Platts is based in London with more than 1,000 employees in more than 15 offices worldwide. Additional information is available at www.platts.com.

About McGraw Hill Financial: McGraw Hill Financial  (NYSE: MHFI) is a leading financial intelligence company providing the global capital and commodity markets with independent benchmarks, credit ratings, portfolio and enterprise risk solutions, and analytics. The Company's iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL and J.D. Power. The Company has approximately 17,000 employees in 30 countries. Additional information is available at www.mhfi.com.

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