On September 25th, 2019, the Basis Trading Platform ("The Platform") of Dalian Commodity Exchange("DCE") was put into trial operation. CITIC Metal Co., Ltd. ("CITIC Metal"), acting as one of the first group of dealers of The Platform, actively quoted basis of iron ore on the first day of The Platform trial operation.

 

On the same day when The Platform was first trialed, Xianwen Wu, the Chairman of CITIC Metal, and Zhong Dong, Derivatives Hedging Business Manager of the Mineral Resources Department, went to Dalian to participate in the “Basis Trading Platform Service Real Economy Forum” organized by DCE. A plenty of industrial organizations, financial organizations and futures brokers attended the meeting. During the meeting, many attendances expressed their support and gratitude to DCE about building The Platform, and discussed the function, significance, operation mechanism and system construction of The Platform.

 

CITIC Metal will actively participate in the trading on The Platform. On the one hand, enterprises could only hedge iron ore base price risks by using the iron ore futures of DCE, before The Platform was launched. Therefore, they couldn’t hedge the risks of basis effectively, especially when the futures prices were heavy backwardation. After The Platform was launched, CITIC Metal can hedge the risks of basis by using The Platform, which will help CITIC Metal to avoid the majority of price risks. On the other hand, The Platform can help CITIC Metal expand iron ore sales channel. Besides, CITIC Metal can graft its iron ore basis trading from off-line to on-line, which will make the basis trading more centralized and transparent.