Iron ore is one of the biggest dry bulk commodities traded and shipped
Until 2010, the majority of traded iron ore – up to 80% – was sold using an annual benchmark price negotiation. Spot trading was predominantly in iron ore fines driven by producers dealing with trading houses and mills.
But huge swings in the delivered price of ore and the emergence of a larger spot market saw the benchmark system finally abandoned in 2010 after failure to agree a level for the second consecutive year.
"Total iron ore production in 2014 was over 3.2bn tonnes; seaborne trade was estimated at 1.33bn tonnes and worth approximately $128bn."
The leading instrument for iron ore hedging and risk management
Since quarterly – and monthly – pricing have become established, iron ore prices have remained volatile, underlining the need for a dedicated, cleared swap contract to manage price risk.
Trading since 2008, the iron ore swap has emerged as the leading instrument for iron ore hedging and risk management. FIS has been instrumental in developing the market; expanding the use of clearing and bringing unrivalled knowledge and unparalleled access for traders.
The first independent brokerage to offer iron ore swaps, FIS provides a daily forward curve to clearing houses globally to ensure an accurate mark-to-market assessment that supports trading decisions.