# Iron ore: Trading

How China's spot market killed the annual benchmark

Source page: https://www.materialinsights.org/commodities/iron_ore/trading/

How China's spot market killed the annual benchmark What this tab covers How and where it is bought and sold: who buys and sells, exchanges and benchmarks, contract types, the big trading houses and how prices are discovered.

For decades iron ore prices were set in annual talks: Australian miners with Japanese mills, Brazilians with European mills. The first settlement became the benchmark for everyone (Humphreys; Tilton & Guzmán). The system broke down as China's spot market grew and big miners saw spot prices far above contract. Today long-term contracts float monthly or quarterly on indices, chiefly the 62% iron fines price delivered to China, published by agencies such as Platts and Fastmarkets. Futures and swaps trade on SGX in Singapore and the Dalian Commodity Exchange.

#### Where it is bought (buyers)

- Chinese steel mills, increasingly through the state buyer China Mineral Resources Group, take about three-quarters of seaborne ore (73.6% of 2024 import value)
- Japanese, Korean and Taiwanese integrated mills buy on long-term contracts (6.3%, 4.6%, 1.3% of 2024 imports)
- European mills buy Brazilian, Canadian and Swedish pellets and fines
- Indian mills buy domestically from NMDC, OMC, auctions and merchant miners

#### Where it is sold (sellers)

- Rio Tinto, BHP and Fortescue from Port Hedland and Dampier (Australia 55.4% of 2024 export value)
- Vale from Ponta da Madeira and Tubarao (Brazil 20.1%)
- Canadian, South African, Swedish and Ukrainian exporters of pellets and concentrate
- Indian miners export some low-grade fines and pellets, mostly to China

#### Exchanges and benchmarks

| Venue | Contract | Notes |
|---|---|---|
| **SGX (Singapore)** | Iron ore 62% Fe CFR China futures and swaps, 100 t lots, USD | Main international hedging venue |
| **Dalian Commodity Exchange (DCE)** | Iron ore futures, 100 t lots, CNY, physical delivery at Chinese ports | China's domestic benchmark futures market |
| **CME** | Iron ore 62% Fe CFR China (Platts) futures | Smaller USD alternative |

#### Contract types

- Long-term supply contracts priced monthly on the average of a 62% Fe index, with grade and impurity adjustments
- Spot cargoes sold by tender or on trading platforms against index plus or minus premium
- Port-side yuan sales of ore from Chinese port stocks
- India: monthly list prices from NMDC and lease-level auctions and e-auctions in Odisha

#### Top trading houses

- Trafigura
- Cargill (ferrous desk)
- Chinese state traders such as Minmetals and Xiamen C&D

#### How prices are discovered

- S&P Global Platts IODEX 62% Fe CFR North China
- Fastmarkets MB 62% and 65% Fe indices
- DCE and SGX futures settlement prices
- Mysteel port-side prices; BigMint Indian ore indices; IBM average sale prices for royalty

## Other sections

- [Summary](https://www.materialinsights.org/commodities/iron_ore/index.md)
- [Overview](https://www.materialinsights.org/commodities/iron_ore/overview/index.md)
- [Correlation](https://www.materialinsights.org/commodities/iron_ore/correlation/index.md)
- [Extraction](https://www.materialinsights.org/commodities/iron_ore/extraction/index.md)
- [Production](https://www.materialinsights.org/commodities/iron_ore/production/index.md)
- [Stocks](https://www.materialinsights.org/commodities/iron_ore/stocks/index.md)
- [Cycles](https://www.materialinsights.org/commodities/iron_ore/cycles/index.md)
- [Movement](https://www.materialinsights.org/commodities/iron_ore/movement/index.md)
- [Criticality](https://www.materialinsights.org/commodities/iron_ore/criticality/index.md)
- [Characteristics](https://www.materialinsights.org/commodities/iron_ore/characteristics/index.md)
- [Emissions](https://www.materialinsights.org/commodities/iron_ore/emissions/index.md)
- [Relationships](https://www.materialinsights.org/commodities/iron_ore/links/index.md)