According to Chinese data provider Qihuokecha, Goldman Sachs Group Inc) and JPMorgan Chase (JPMorgan Chase & CoCommodity investors served by Chinese mainland brokerage firms are the big winners of China's iron ore **strong** this year.
Iron ore** on the Dalian Commodity Exchange has surged about 40% since late May, with the steelmaking material reaching its highest level since mid-2021 last month, despite a severe downturn in the property sector that has affected steel demand.
While this development has caused discontent in China's more stressed steel industry and ***, it has also brought benefits to the clients of the two Wall Street banks' ** brokerage firms in China. Many of the two banks' best brokerage firms in China are not located in Chinese mainland.
Qihuokecha estimates that they have netted 25 yuan on iron ore trading this year500 million yuan (3$5.7 billion). As of Wednesday, that included Goldman Sachs' Qiankun Futures CoRMB 14800 million yuan and JPMorgan Chase *** JPMorgan Futures CoRMB 10700 million yuan.
Note: Figures are indicative estimates based on trading positions, cost analysis, and volatility.
Goldman Sachs and JPMorgan Chase declined to comment. Qihuokecha said its estimates are based on data including trading positions, cost analysis and volatility.
In China, the constant supply of iron ore and steel is a sensitive issue as it can have an impact on infrastructure and manufacturing costs. The relevant authorities have often intervened to cool down, including calling on some of the country's brokerage firms to warn them not to encourage excessive speculation.
The lucrative profits on iron ore are likely to come from long positions opened by traders through brokers – in effect bets*** Market participants say that brokerages at Goldman Sachs and JPMorgan Chase & Co. tend to serve more overseas investors who are active in Chinese commodities**.
Qiankun**'s customers are still optimistic. As of Wednesday, the company held the most total long positions in the most active contracts, followed by Guotai Junan Futures Co., Ltd., according to data from the Dalian Stock Exchange) and JPMorgan Chase (JPMorgan).
The calculations of qihuokecha are only an estimate and do not share their precise methodology. But iron ore traders privately said the result was in line with their observations of the market this year.