Speech by Minister Lim Hng Kiang at the Singapore Iron Ore Forum Opening Ceremony at Marina Bay Sands Convention Centre, Singapore

Distinguished Guests,

Ladies and gentlemen,

Good morning. 

Challenges and changes ahead

The past year has been a challenging one for the metals and minerals sector. As global economic growth continues to be sluggish, demand for industrial metals has been weak. Output surplus has correspondingly been widening. Lower oil prices and the stronger US dollar have also been driving down the prices of steel-making raw materials and base metals. All these factors have led to greater volatility in the prices of iron ore and other steel-making materials. Earlier this year, we saw the price of iron ore drop below 50 US dollars.  To add to the complexity, several steel-importing countries have reacted by imposing or increasing anti-dumping duties on steel producers with greater output and weaker currencies.

The next few years will likely continue to be challenging, particularly as the US moves to tighten its monetary policy and the Chinese economy slows. But there are still a few bright spots. A rebalanced Chinese economy will grow at a more sustainable rate in the longer term. Meanwhile, IMF forecasts that India’s economic growth for 2015, at 7.5%, will be the fastest in five years. In addition, Southeast Asia’s appetite for steel is also growing. In 2014 alone, demand rose by 6%. These emerging Asian economies will continue to drive demand in the near-to-medium term.

Singapore’s value proposition as Asia’s Metals and Minerals Trading Hub

Singapore is well-placed to help metals and minerals traders access opportunities in the region:

(a) First of all, we have a vibrant ecosystem of more than 140 buyers, sellers and players along the commodities value chain from all over the world, including the top three global trading companies. This creates an effective and neutral marketplace for global traders to structure their deals.  Today, the Singapore Exchange (SGX) clears more than 90% of the Fe-62 swaps, which is one of the most commonly traded.

(b)Second, we have highly liquid financial markets. We are also the largest offshore RMB clearing hub, which gives traders based in Singapore a keen advantage when dealing with China, the world’s largest importer and producer of iron ore.

(c)Third, we offer trading companies a highly qualified workforce with cultural and linguistic connections across key Asian ore suppliers and markets. Our community is also fortified by global talent and global trading companies, who have found Singapore a good place to live and conduct business.

(d) We offer political and economic stability and strong legal and arbitration institutions to give industry players and traders the assurance and support they need. 

Upgrading to stay relevant

To stay relevant, we have and will continue to update and transform our infrastructure to match the changing demands of the industry.

First, in response to increased price volatility, we have upgraded our support infrastructure to offer better regulated and more transparent risk management to our industry players. This year, SGX launched two new derivative contracts for Fe-58 iron ore fines to help traders manage their risk when trading in lower grade iron ore.

Second, to encourage free trade, we have strengthened collaborative efforts with key international partners such as the International Steel Trading Association (ISTA). ISTA will be setting up a branch in Singapore later this year, and will work closely with IE Singapore to facilitate dialogue between producers, traders and consumers, and promote a competitive international market for steel.

Conclusion

The Singapore Iron Ore Week itself has become a premier event where global players gather to discuss developments in the industry. Now in its third run, it is an integral part of the vibrant trading network in Singapore. Thank you for your support and participation. I wish you a fruitful week ahead.