China exchange mulls accepting lower-grade iron ore to ease supply crunch
BEIJING, May 11 (Reuters) - China's Dalian Commodity Exchange on Tuesday proposed reducing the standard iron content requirement in ore delivered against its flagship futures, seeking to broaden supply sources to include lower grades and cool a record-setting rally.
Prices for steelmaking raw material DCIOcv1 iron ore are up some 50% so far this year and have repeatedly stuck all-time highs on the exchange, amid strong demand in top consumer China and concerns over supply as Beijing's relations with key producer Australia continue to deteriorate. nL1N2MY0GU
Under proposed revisions to the contract's trading rules, which are open to public feedback until Saturday, the Dalian bourse plans to lower its standard iron content in ore to 61% from 62%, according to a statement on its website.
"Market experts believe that the proposal ... will further expand deliverable resources and come close to the requirements of the industry, in line with the new market situation and changes in spot trade," it added.
The exchange also said it plans to regularly change premiums and discounts for iron ore brands to help stay in sync with the spot market when there are big price fluctuations. It had proposed making "dynamic" adjustments to premiums and discounts in December. nL1N2IS027
The bourse currently allows 17 iron ore brands - including those from Australia, Brazil and China - to be delivered. Around 620 million tonnes of material consumed in China each year meets delivery conditions, it said.
The most traded Dalian iron ore contract, for delivery in September, touched a record 1,315.50 yuan ($204.72) a tonne in night-time trading on Tuesday and closed the session at 1,305.50 yuan, up 0.4%.
($1 = 6.4260 Chinese yuan renminbi)
China steel futures hit record highs, iron ore extends rallynL1N2MY0GU
Dalian exchange proposes dynamic premiums, discounts for iron ore futures nL1N2IS027
(Reporting by Min Zhang and Tom Daly; Editing by Lisa Shumaker)
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