SGX Iron Ore Forum: more Chinese delegates a sign of China market's revival?

After a painful 2014 and 2015, Chinese iron ore and steel markets have shown a small sign of revival--at least that is what the SGX Singapore Iron Ore Forum (SIOF) had told its audience of over 300 people on May 19.

The SIOF, now on its fourth year, enjoyed another full house with a nice mix of participants. I do not think it is just a personal observation when I say many more Chinese faces showed up at the event. Some Chinese companies sent up five to six delegates this time around.

Interestingly and creatively, SGX decided to put both the conference and exhibition booths under the same roof in a giant hall, so attendees could wander around should they be bored with the speeches. The noise was always in the background but it's not really disturbing the conference, and people could mingle without missing the keynote speeches.

Photo by Bryan Teo

China's obviously a hot topic at the forum. People are still trying to understand what is happening with China’s economy and what it could mean to the steel and iron ore markets. There are also discussions on the possibility of China’s Dalian Commodity Exchange (DCE) seeing another round of volatility as it experienced over late April-early May.

Speaking of DCE, some attendees have noted the absence of the futures exchange at the SGX event: no sponsorship, no delegates. Some people wondered whether it had to do with the relationship between SGX and DCE, or with DCE’s busy schedule in promoting internationalization and regulating speculative trading where iron ore futures contracts are concerned. (Related podcast: Will China's commodity exchanges be able to create international commodity benchmarks?)

The major takeaway from the one-day conference for me, personally, is that people are more realistic about their expectations on China’s economy--acknowledging that restructuring and the slowdown is for real and may last for some time. Some are even challenging the accuracy of China’s GDP numbers.

At the same time, more people are definitely looking at iron ore derivatives and what it can do to the Chinese steel industry and physical iron ore market, with more pairs of eyes actually being from the Chinese delegates who have been actively participating in the physical iron ore trading.

Last but not the least, SGX officials shared in great detail what its iron ore contracts--including swaps, futures and options--are with four major differences from the DCE iron ore futures contracts, and emphasized that the SGX iron ore products are more relevant with the fundamentals, thus less volatility.