China will launch its first iron ore and thermal coal swap contracts on Aug. 4, the Shanghai Clearing House said, marking the country's latest effort to gain influence over the benchmark pricing of key commodities.
China is the world's top iron ore and coal consumer. Its launch of the two swap contracts could pose a threat to the cash-settled iron ore and thermal coal swaps contracts cleared by the Singapore Exchange and CME Group .
The two contracts will be priced in Chinese yuan and will be traded over the counter, the clearing house said on its website late on Tuesday, confirming an earlier Reuters report. Only Chinese companies or wholly foreign-owned enterprises can trade in the swaps. [ID:nL4N0PP2TA]
The iron-ore swaps contract, based on ore with 62 percent content and traded in a lot size of 100 tonnes, will be priced against indices published by information providers CUSteel, China Beijing International Mining Exchange and Mysteel. All three indices will have an equal weighting.
The thermal coal swaps will be based on the government-backed Bohai-Bay Rim Steam Coal index and will have a lot size of 200 tonnes, according to details on the Shanghai Clearing House website.
Source:shanghai Metals Market
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