Iron ore derivatives trade booms as prices tank and hedging rises
Producers driven to hedge to manage risk alongside speculators betting prices will fall further
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TRADING volumes for iron ore derivatives have more than doubled this year from 2014 and are set to climb further, driven by a growing appetite to manage risks in a market where producers are struggling to survive as prices crumble.
A global glut, with major miners churning out iron ore in vast quantities and Chinese steel demand falling, have dragged prices of the raw material to their lowest since the financial crisis, squeezing margins at smaller producers and even forcing some out of business.
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