Recent failures of commodities traders bear watching

SINGAPORE'S status as a key commodities trading hub for Asia has come under the spotlight in the wake of recent failures among big names in this sphere.

The collapse of Singapore's Hin Leong Trading - part of a sprawling empire with businesses ranging from oil trading, terminalling and storage, sea transportation and bunker supply - has rocked the city state's tight-knit oil community. Much of this is unfolding as a result of an unprecedented crash in oil prices amid demand destruction and the ensuing supply glut triggered by the Covid-19 pandemic.

Over 20 banks, including Singapore's three banking stalwarts, are exposed to Hin Leong Trading which has a hefty US$4 billion debt pile. The giant trader founded by low-key tycoon Lim Oon Kuin ran out of cash as margin calls ratcheted up and lenders pulled the plug on credit facilities after oil prices tanked. The trader and sister company Ocean Tankers - the region's largest owner of oil tankers - are seeking to be placed under judicial management (JM) and are currently under interim judicial managers.