The Singapore Mercantile Exchange plans to launch an iron ore futures contract in the second quarter, its chief executive said on Wednesday, as it moves to tap a growing need for a more transparent pricing of the steelmaking ingredient.

SMX announced the launch period a day after Indian Commodity Exchange (ICEX) disclosed plans to launch an iron ore futures contract in a month, after securing approval of the commodity regulator.)

 

While Singapore and India look to be racing to establish the world’s first iron ore futures market at a time when spot prices are marching toward record highs, analysts say such a hedging instrument may take time to gain traction and could initially suffer from limited liquidity as it competes with the more widely traded forward swaps.

 

“Core aspects of the SMX iron ore futures contract have been finalized in conjunction with MAS (Monetary Authority of Singapore) and industry feedback for anticipated launch in Q2 2011,” Thomas McMahon said in an emailed response to a Reuters query.