IRON ORE WEEK: Fastmarkets to drive Singapore Steel Forum with SGX, Enterprise Singapore

A new Singapore Steel Forum will kick off for the first time next year as part of Singapore Iron Ore Week (SIOW) 2020.

Fastmarkets will drive the forum together with the Singapore Exchange (SGX) and Enterprise Singapore as part of an expanded SIOW, which will be held on May 18-21 2020 at Sands Expo & Convention Centre.

The Singapore Steel Forum will be held on May 20 and will include global steelmakers and end-users from sectors such as construction, automotive and consumer electronics.

SIOW 2.0 will expand its focus to other parts of the ferrous chain, including steel, coking coal and freight to offer more value to industry participants.

“SIOW 2.0 promises to be bigger and better in delivering greater insights and provoking knowledge sharing in every part of the steel value chain – coal, steel and freight,” William Chin, Head of Commodities at SGX, said.

Other organizations will organise coking coal and freight forums.

Steel derivatives
SGX continues to keep a keen eye on the steel market and explore opportunities for steel-based derivatives because of its proximity to upstream raw materials iron ore and coking coal.

“China occupies a big space in the world of steel and it makes sense to see how we can help bring steel price transparency with an internationalized price,” Chin said.

Opinions among steel market participants in Asia about the usage of indexation and derivatives are varied, although there is growing interest in the use of hedging mechanisms in both the physical and financial markets.

Market participants have previously looked towards China as a regional benchmark price setter and key driver of industry trends due to its previous stature as a global steel exporter.

China’s steel export prices, such as those assessed by Fastmarkets’ steel hot-rolled coil index export, fob main port China, or its steel reinforcing bar index export, fob China main port, serve as key references for Asian steel market participants to trade with, or to set discounts or premiums to or as the basis for steel derivatives.

But increasing capacities in Southeast Asia, typically an import market for global steel supply, is proving to be another obstacle in the search of a common price benchmark for market participants.

Rising domestic steel capacity in burgeoning economies such as Vietnam, Indonesia and the Philippines, are now challenging China-based steel mills, fulfilling domestic demand alongside other advantages such as shorter lead times and less logistical hassle. Domestic supply also does not incur any anti-dumping or anti-circumvention duties from the local Customs authority.

Record 2019 for SGX
SGX saw 6.6 million lots of commodity contracts traded in the third quarter of this year, including a record 570 million tonnes of iron ore and 146 million tonnes of iron ore options.

It expects to close 2019 with 2 billion tonnes of iron ore traded on its platform, including 20 million tonnes of the 65% Fe iron ore derivative contract which is based on Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao.

It is also the largest dry bulk forward freight agreement (FFA) clearer and has 100% market share for coking coal derivatives.