QINGDAO, China (Reuters) - China’s largest physical iron ore trading platform expects its trade volumes, affected this year by volatile prices for the steelmaking commodity, to recover in 2018 and reach 100 million tonnes in the next five years, its president said.
Volume traded on the Beijing Iron Ore Trading Center Corporation (COREX) would breach 30 million tonnes this year, said You Song, but may be lower than the 35.35 million tonnes recorded in 2016.
“Trading was more active when prices went up ... and traders normally hold their steps when prices fall,” You told Reuters on the sidelines of an industry conference.
The price of iron ore has dropped by nearly a third from this year’s peak, trading at $64.95 a tonne on Tuesday.
Planned steel production cuts in China during winter may also reduce trading volumes, You said.
Chinese steel mills will face output curbs of as much as 50 percent from November through March as part of Beijing’s war against air pollution.
Some cities in top steelmaking province Hebei have even ordered mills to enforce the production curtailment a month earlier than expected.
“The environmental inspection and output cutbacks in winter may have some impact on iron ore trade volumes,” said You.
But he said he was confident that trading volumes at COREX would rise to 40 million tonnes in 2018 and to 100 million tonnes over the next five years, with its membership widening and with global miners likely to increase transactions via the platform.
COREX, where cargoes from top iron ore suppliers Vale, Rio Tinto and BHP Billiton are among those changing hands, is considering including more products such as coking coal and copper.
“We won’t exclude the possibility of adding more products in addition to iron ore, as long as there is demand in the market ... But iron ore will always be our core business and major focus,” said You.
Reporting by Muyu Xu and Manolo Serapio Jr.; Editing by Joseph Radford