Iron ore rise cements Singapore's global status

IRON ore is now widely viewed as the second most important global commodity behind oil. Its evolution has mirrored the transformation of China's infrastructure. Singapore has quickly stepped up to become the world's leading hub for the global iron ore trading community.

The emergence of iron ore into broader recognition has been rapid by commodity market standards. Just 10 years ago, the magnetic red dirt was traded in an opaque market with contract negotiations taking place annually amid smoke-filled rooms in Japan and later China. The commodity now has two liquid futures markets on the Singapore Exchange (SGX) and Dalian Commodity Exchange (DCE). These financial markets are trading 1.2 times and 20 times physical seaborne market volumes, respectively. Singapore's hub status for iron ore remains secure, with all major mining companies and a dozen or so major iron ore trading companies located in the republic, as well as trading arms of Chinese steelmakers. Additionally, the city hosts the iconic Singapore Iron Ore Week conference, which went virtual this year due to the Covid-19 pandemic.

Since its inception in 2009, the volumes on SGX have increased with open interest holding steady in the 62 per cent Fe futures contract. The iron ore lump contract also had good growth in volumes, supporting the overall iron ore volumes. Growing financial participation in iron ore derivatives has firmly entrenched Singapore as "the home of international iron ore derivatives" with its strong internationalisation efforts.