SGX 65% Fe Iron Ore Futures Soar on Strong Demand and Speculative Trading

SGX 65% Fe Iron Ore Futures Reach Record Trading Volumes

The Singapore Exchange’s (SGX) 65% Fe iron ore futures contract surged to a new record volume of 18,895 lots on August 13. This increase follows a robust July where over 90,000 lots traded, signaling growing interest in high-grade iron ore. The focus on premium low-alumina, phosphorus, and silica (LAPS) ores arises from stricter sintering regulations in China, forcing steelmakers to demand higher quality materials. Additionally, China’s upcoming military parade and efforts to control coal overcapacity have boosted coke prices, further increasing demand for efficient iron ore.

Market participants responded strongly to a 170,000-tonne cargo of 65% Fe Carajas fines sold at $121.15 per tonne CFR Qingdao. This trade helped reverse market sentiment, encouraging traders to buy September and October futures contracts before market close. The growing price spread between 65% and 62% Fe iron ore fines underlines the premium for high-grade material.

Growing Importance of SGX 65% Fe Iron Ore Futures for Market Hedging

The SGX 65% Fe iron ore futures contract provides a critical tool for traders and mills to hedge exposure to premium iron ore grades. According to SGX’s Tan Tee Yong, the contract’s rising volumes reflect its value in managing risk within an evolving steelmaking market. Przemek Koralewski emphasizes that the contract helps express views on profitability while offering precision hedging for fines, pellets, and pellet feed.

Editorial director Andrew Wells notes that the 65% Fe futures reflect a market shift toward high-Fe materials, driven by China’s tightening sintering and steel production regulations. These policies promote demand for low-impurity ores, especially Brazilian 65% Fe fines, amid stable steelmaking margins and rising domestic coke costs.

SuperMetalPrice Commentary:

The SGX 65% Fe iron ore futures surge highlights a significant structural shift in iron ore trading and steelmaking demand. As China enforces stricter environmental and production controls, market participants increasingly prioritize high-grade ores. These contracts not only offer effective hedging but also signal a broader trend where premium iron ore grades set pricing benchmarks globally. Traders and producers alike should monitor this evolving landscape closely, as high-grade materials will increasingly influence steel sector profitability and raw material strategies.