Exchange operator CME Group and Chinese iron services firm Mysteel released a statement on January 20 indicating that they are planning to collaborate on the creation of over the counter (OTC) derivatives that will help market participants manage risk related to iron.

Mysteel has established partnerships with more than 20 metallurgical market entities and positioned itself as a major player in the country's steel e-commerce sector. The company gathers data on more than 60 cities throughout the country and currently boasts more than 600,000 members.

CME Group has generated a range of financial products that now offer market participants the ability to hedge their exposures related to iron and steel.

Harriet Hunnable, CME Group Managing Director, Metals, said in the statement that "this new opportunity with Mysteel will help us develop the tools needed for our customers to manage price risk associated with conducting business in the steel industry in China."

Reuters reports that a perfect example of the growing trading activity related to ferrous-based derivatives is the volume of iron-ore swaps transactions. Data provided by the media outlet indicates that July trading volume of these risk-management tools came close to an annualized rate of 50 million tons.