Volume of Iron ore swaps pick up in May

The volume of iron ore swaps cleared by the Singapore
Futures Exchange (SGX) have picked up in May after seeing a drop in April.

Volumes fell to its lowest level so far in April 2012 to
reach 3.8 million tones mainly due to low price volatility but as prices moved
out of their April range in the last couple of weeks, traders have returned to
the market.

In the first two weeks of May about 4 million tonnes worth
of iron ore swaps were cleared, according to a broker at FIS. If these volumes were to be repeated in the next two weeks, May
would represent a new record month for iron ore swaps volumes.

“April was very range-bound so traders were happy to
stay on the sidelines but in May we have seen better volumes so far,” said  a London-based iron ore swaps broker at London Commodity Brokers
(LCB).

“I think it's the nature of the market that when
volatility is low, trading volumes fall but we should see less and less of this
as the market matures and the liquidity pool expands with new players getting
in. Volumes should be more consistent going forward and we won't only rely on
big market moves”, he added further.