In the US$7 billion-a-day (S$9.7 billion-a-day) global iron ore futures market, size does not matter when it comes to clout.
Contracts in Singapore have greater pricing power than those traded in China even though the volumes in the former are more than 20 times smaller, according to Goldman Sachs Group.
Although investors may assume that it is the Dalian Commodity Exchange, or DCE, that sets the global price given the high volumes, it is the contract on the Singapore Exchange, or SGX, that drives the market, the bank said in a report.
The reason may be that institutional investors account for a greater share of trade in Singapore, it said in the Oct 20 note.
While China's policymakers have said they want to develop its raw material futures markets as hubs for setting prices - seeking to marry the country's commercial heft with a greater say in determining how much commodities cost - Goldman's finding suggests that that goal remains a distant one.
In iron ore, the country is the world's largest buyer, accounting for more than two-thirds of the seaborne market. Most cargoes come from miners in Australia and Brazil.
"Size doesn't matter," analysts including Amber Cai wrote after crunching the numbers.
The bank's analysis revealed that the SGX has more pricing power than the DCE, with daily changes in Singapore consistently leading daily changes in Dalian, they wrote.
Iron ore futures in Dalian, which are priced in yuan and largely closed to offshore investors, have rallied 36 per cent this year.
The contract drew global attention in March and April, when a retail investors' frenzy in China spurred a surge in raw material prices and volumes that was then quelled by regulators.
SGX iron ore futures, which are priced in US dollars, are 39 per cent higher, while spot prices from Metal Bulletin have risen 35 per cent.