Iron ore lump premium contracts in October on the Singapore Exchange saw traded volume at 23,210 lots, or 2,321,000 mt, settled against the Platts spot lump premium assessment, close to a 30-fold surge since the start of the year.
The traded volume stood at merely 80,000 mt in January.
The traded volume of lump premium contracts has increased substantially since the start of August, when Platts increased the frequency of the physical lump assessment from weekly to daily, with traded volume rising 300% from July.
Trade was concentrated in the prompter month strips, with volume for the November and December strips having risen to 1,550 lots and 4,100 lots respectively on October 31, compared with zero at the start of the month.
However, SGX's lump premium contract volume fell 34% on the month from the all-time record high in September at 3,505,000 mt.
Mills in northern China have been facing sintering restrictions and output cuts ahead of the winter season, when air quality tends to deteriorate. As a result, raw materials demand, including iron ore lump, has thinned considerably in recent weeks.
"There is less need to hedge when premium is at this level because it's likely to sustain given seasonal demand," an East China trader said.
On the back of lackluster demand, Platts spot lump premium assessment fell more than 50% from a historical high of $0.4595/dmtu on September 18 to $0.2035/dmtu on Wednesday.
October open interest was 2,795,300 mt on SGX's lump premium contract, down 1.52% on the month.
Meanwhile, SGX's daily iron ore fines contract traded volume averaged 50,756 lots in October, down 21% from September.
SGX iron ore fines contracts are settled against TSI's Iron Ore CFR China index, a unit of S&P Global Platts.
