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Iron-Ore Trading Tripled Last Month on Demand Speculation

Feb. 6 (Bloomberg) -- Trading in iron ore tripled last month from a year earlier on speculation of increased demand this month after China holidays, The Steel Index Ltd. said.

Swaps and options trading in iron ore across all exchanges and clearinghouses was 19.63 million metric tons, The Steel Index, which publishes iron ore prices, said in an e-mailed report today. That’s up 215 percent from 6.24 million tons a year earlier and near the record of 20.3 million tons in September 2012, figures showed.

The derivatives are used to hedge price swings and bet on Chinese growth. The global benchmark price surged 79 percent from an almost three-year low on Sept. 5. Volatility increased in the second half of January as some traders reduced short positions, The Steel Index said in the e-mail. Weather disrupting supplies in Australia, Brazil and China also contributed to volatility, said Peter Cho, a broker at ICAP Plc in Singapore.

“The majority of the market continues to believe that iron-ore supply issues won’t be relieved in the near term, along with positive economic data, and support from the new leadership for urbanization,” Cho said by e-mail today.

Prices of material with 62 percent iron-ore content delivered to the Chinese port of Tianjin climbed 7 percent this year to $155.10 a dry ton, according to The Steel Index. February swaps are trading at $157 a ton, according to GFI Group Inc.

To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Isaac Arnsdorf in London at iarnsdorf@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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