The Steel Index to launch daily iron ore reference prices

The Steel Index (TSI) will increase the publication frequency of its iron ore reference prices from weekly to daily from the beginning of June.

“Strong growth in the iron ore spot market coupled with an increasing number of companies committed to submitting their transaction data to TSI now enables us to fulfil our objective of providing rigorous daily reference prices,” says Steven Randall, Managing Director of The Steel Index. “This provides not only the mining, trading and steel industries with the frequent and reliable price information they need, but also the financial brokers and clearing houses with the basis for a highly liquid swaps market.”

TSI is the only iron ore index used in cleared Over-the-Counter (OTC) swap contracts. Singapore Exchange (SGX) launched the world’s first clearing of iron ore swap contracts on 27 April 2009 and LCH.Clearnet has announced it will begin clearing iron ore swap contracts before the end of this month. Both use exclusively TSI’s iron ore reference price for 62% Fe fines delivered to China for settlement.

TSI’s iron ore reference price has won widespread industry support due to its rigorous and verifiable methodology. Index prices are based entirely on actual spot transaction data submitted by industry participants.

“London Dry Bulk (LDB) is very excited about the move to daily pricing in terms of the reference pricing for physical spot and iron ore swaps markets. This is yet another important move in the direction of price transparency in this commodity,” says Clive Murray, CEO of LDB. The company has been at the forefront of developing a liquid market in iron ore swaps (a price insurance instrument) and the physical prompt market.

“Daily pricing will bolster the robustness of the swaps market and the acceptance of their use. LDB is proud to be part of these developments and we believe this move will bring greater confidence to the physical and the swaps iron ore market to the benefit of all industry stakeholders," he adds. “Brokering iron ore swaps that will be based on daily pricing and cleared through both SGX and LCH will add to the liquidity in the product.”

Michael Gaylard, Strategic Director of Freight Investor Services (FIS), a leading OTC iron ore and freight broker, comments “This is a very positive move by TSI, and I expect a daily number to be very well received by the traders in the market. It also represents a milestone for the spot iron ore market as the number of physical transactions carried out daily grows.”

TSI’s daily iron ore reference prices will be compiled using the same rigorous and verifiable methodology that has won widespread industry and financial sector support for its weekly iron ore reference prices. TSI’s index prices are based entirely on actual spot transaction data submitted through secure online systems by industry participants.

TSI’s daily iron ore reference prices will be provided to its subscribers via a daily email and will also be available on The Steel Index website price analyser. From June 2009 onwards, SGX’s and LCH.Clearnet’s cleared iron ore swaps contracts will both settle against the monthly average of TSI’s daily 62% Fe iron ore reference price published in the expiring month.

Ends

Further information
Caroline Macmillan, Marketing Manager, The Steel Index: +44 20 7645 9413, caroline@thesteelindex.com

Note to Editors:

About The Steel Index:

The Steel Index (TSI) is the premier source of independent, reliable, steel and iron ore price information based on actual transactions. It is the most rigorous price discovery service available covering a wide range of steel and iron ore prices in major regions around the world. Price data is submitted confidentially on-line by companies for the steel and iron ore products they buy or sell. Reference prices are then calculated using transparent and verifiable procedures.

The Steel Index is the only index used in cleared Over-the-Counter (OTC) iron ore swap contracts. Singapore Exchange (SGX) and LCH.Clearnet both use exclusively TSI’s iron ore reference price for 62% Fe fines delivered to China for settlement of their cleared OTC iron ore swap contracts.

Further information on The Steel Index, including details of product specifications and procedures and a free trial of the service are available at http://www.thesteelindex.com/.