Dalian Commodity Exchange (DCE) has announced that it will implement a brand system for iron ore contracts for delivery starting from September 2020, which will prevent the supply of lower quality material, as happened in the past. “DCE has restricted the scope of delivery products by setting up requirements on brands, adjusted the previous quality premiums and discounts and added the brand premiums and discounts,” the exchange stated.
DCE has selected nine import and two domestic iron ore brands for the new system, and only they will be allowed to be delivered. The deliverable brands are PB Fines, BRBF, Newman Fines, Mac Fines, Jimblebar Fines, Roy Fines, Super Special Fines, FMB Blend Fines, Carajas Fines, HBIS Concentrates and Ansteel Concentrate. PB Fines have been set as the benchmark, with the premiums and discounts of RMB 0/mt, while for other brands extras have been set based on the difference seen previously and are presented in the table below.
Brands premiums and discounts:
|
Product |
Extras, RMB/mt |
|
Newman fines |
0 |
|
BRBF |
+20 |
|
Mac fines |
-20 |
|
Roy fines |
-20 |
|
Jimblebar fines |
-25 |
|
Super Special fines |
-90 |
|
FMB Blend fines |
-75 |
|
Carajas fines |
+35 |
|
HBIS concentrates |
+15 |
|
Ansteel concentrates |
0 |
Moreover, DCE has also implemented additional premiums and discounts depending on the chemical composition of the product as iron ore products of the same brand can differ. The Fe quality standard is 62 percent. The price will be increased or cut by RMB 1/mt for every 0.1 percent change in the product. The exchange has also set the discounts and premiums from the standard content of Silicon Dioxide (SiO2), Aluminum Oxide (Al2O3), Sulfur (S) and Phosphorus (P).
“Implementing the brand delivery system will help to set products with the higher market acceptance as target delivery products, thus further increasing the representative of iron ore futures prices,” DCE said.