(Reuters) - China's central bank has approved the launch of the country's first iron ore and thermal coal swap contracts, two industry sources said on Monday, giving industry participants new financial tools to hedge the risk of volatile prices.
China is the world's top iron ore and coal consumer. The launch of the two swap contracts marks China's latest effort to gain influence over the benchmark pricing of a key commodity.
The move could pose a threat to the cash-settled iron ore and thermal coal swaps contracts cleared by the Singapore Exchange and CME Group.
The new contracts will be priced in the yuan and trade over the counter, with clearing handled by the Shanghai Clearing House, said two industry sources familiar with the matter.
"The two contracts will be launched soon and will be rolled out at the same time," said one of the sources, who declined to be identified as he was not authorised to speak to the media.
The People's Bank of China could not be reached for comment.
The swap contract for iron ore with 62 percent content will be priced against a combination of reference indices published by information providers CUSteel, China Beijing International Mining Exchange and Mysteel.
The thermal coal contract will be based on the government-backed Bohai-Bay Rim Steam Coal index.
A swap contract is a cash-settled derivative between a seller and a buyer at a fixed price for a set amount of time, providing price certainty for both parties on the underlying commodity.
China buys at least 60 percent of the world's seaborne iron ore and last year imported a record 820 million tonnes, multiple times the volume of iron ore swaps cleared by the Singapore Exchange, highlighting the huge hedging opportunity in China.
China's total coal imports stood at 330 million tonnes last year and accounts for about a quarter of global trade.
I changed my vote because of CASA's dirty tactics and short attack against Cliffs.
Vipinstupid, tell that your friends at CASA...
Follow me, don't vote for CASA...CASA is using dirty tactics...CASA is shorting Cliffs...I cannot, in good conscience, vote for an entity that is actively shorting CLF...I feel better about myself...
Thank you! Your voting instructions for the Cliffs Natural Resources Inc. Management White Card Annual Meeting have been received. If you would like to change your vote please click on the link below.
Control Number: 1XXXXXXXXXXXX
Voting instructions must be received by: July 28, 2014 5:00 PM Eastern Time
Your vote will be cast as follows:
Proposal Your Election
1. Election of the following nominees:
1.01 Gary B. Halverson For
1.02 Barry J. Eldridge For
1.03 Mark E. Gaumond For
1.04 Susan M. Green For
1.05 Janice K. Henry For
1.06 Stephen M. Johnson For
1.07 James F. Kirsch For
1.08 Richard K. Riederer For
1.09 Timothy W. Sullivan For
2. Approval of the 2014 Nonemployee Directors' Compensation Plan. Against
3. Approval, on an Advisory Basis, our Named Executive Officers' Compensation. Against
4. The approval of the Cliffs Natural Resources Inc. Amended and Restated 2012 Incentive Equity Plan. Against
5. Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm to serve for the 2014 fiscal year. For
I just changed my vote for Cliffs' entire slate....I will show you the proof as soon as I received confirmation...CASA is overplaying its hand...No one in his right mind should vote for the BAGASCUMBAGS at CASA...
I agree that Cliffs is doing an abysmal job of defending and protecting the best interests of shareholders. On the other hand, the stock has plummeted $11.00 since CASA came on board. The nexus/temporal relationship between the advent of CASA and the short attack against Cliff is clear as day.
A vote for CASA is a vote for the destruction of CLF. Believe it or not, CASA is shorting CLF. They are stealing money from your portfolio.
The so-called ANALysts are using unreliable and unverifiable data in their forecasting models, which, obviously, are inconsistent with real-time data by Citibank and Fortescue Metal Group. They were wrong about Aluminum...
"Board leadership will be provided by a different Chairman to be elected by the new Board following the completion of the Annual Meeting."
When it comes to the departure of Kirsch, there should be no ifs, ands, or buts. It goes without saying that there's widespread disapproval of Kirsch. Cliffs should fire him, forthwith, and remove the controversy and uncertainty surrounding his status on the board.
This back-and-forth nonsense between Cliffs and Casablana is immature and unhelpful.
Global Steel Analysts review market conditions in Asia, Europe and the U.S. and discuss recent price moves in iron ore, met coal and global steel on an Analyst/Industry conference call. Covered companies AKS, ATI, CLF, CMC, GGB, MTL, NUE, RS, SCHN, SID, STLD, TX and X may be discussed on the Analyst/Industry conference call to be held on July 14 at 10 am.