.jpg)
INTRODUCTION
1. Guest of Honour, Minister of State for Trade and Industry, Ms Low Yen Ling, our strategic partner Enterprise Singapore, event partners Fastmarkets, S&P Global Commodity Insights and TradeWinds, sponsors, distinguished guests, ladies and gentlemen, good morning.
2. A very warm welcome to Singapore International Ferrous Week 2023. Thank you for joining us at this flagship event for the steel value chain.
3. As many of you will know, this is the tenth year that SGX Commodities is running this week-long conference, formerly known as the Iron Ore Week. With your strong support, what started off as a single forum focused on iron ore, has now evolved into one of the most important gatherings for the global steelmaking value chain, across iron ore, steel, coking coal and shipping markets.
4. As we kick off this week, I want to take a moment to share my quick thoughts on the trends that are shaping the industry.
SUSTAINABILITY
5. First, and not surprisingly, sustainability. Sustainability continues to be a recurring theme in all commodity forums. While steel is the world’s most important engineering and construction material with few known substitutes, the industry is often seen as a significant contributor to global emissions, currently accounting for about 8% of global greenhouse gas emissions.
6. The sector has been ramping up efforts to reduce its carbon footprint, through sustainable mining practices, energy-efficient production processes and the substitution with “greener” raw materials and energy sources.
7. I am encouraged by the industry’s decarbonisation efforts, and am confident of the steel industry’s strong leadership in the global green transition.
8. For SGX Group, as a trusted international marketplace, we believe we are in a unique position to facilitate collaboration within the ecosystem, to catalyse change and support markets and businesses on their sustainability journey.
9. We are a founding signatory of the Net Zero Financial Service Providers alliance, and a member of the Glasgow Financial Alliance for Net Zero (GFANZ), the world’s largest coalition of financial institutions, committed to the global economy net zero transition.
10. In this capacity, we proactively engage partners and stakeholders in our ecosystem, steer challenging but important conversations on sustainable capital allocation, financial products and services that also relate to the commodities sector.
11. It is in this context that sustainability is a core theme of this year’s ferrous week. Steel is one of the most recyclable materials on earth, and remains an important metal in the global energy transition. According to the World Steel Association, every tonne of steel scrap used for steel productions avoids the emission of 1.5 tonnes of CO2. Optimising steel scrap recovery is therefore critical in ‘greening’ the steel value chain.
SGX’S COMMODITIES SUITE
12. Over the past decade, SGX Commodities has developed the “virtual steel mill”, where price risks across the steel value chain – from raw materials to shipping to the end-product steel – can be managed efficiently with our complete suite of iron ore, steel and freight derivatives.
13. More broadly, we have in recent years developed a suite of derivative products that the industry can utilise effectively, as they transition towards cleaner energy sources and raw materials.
14. These include the 65% high-grade iron ore product that allows more steel to be produced on an equivalent tonne of ore, low sulphur fuel oil as the greener version of the high sulphur fuel oil, methanol and electric vehicle battery metals such as cobalt and lithium that are powering the greening of passenger transportation.
ASSET ALLOCATION INTO ASIA AND INTO COMMODITIES
15. The global economy is in unchartered territory. After more than a decade of free money, the Fed has raised interest rates to its highest level in 16 years. Once a mainstay for investors, the classic 60/40 equity-fixed income balanced portfolio has taken a hit, with some market commentators suggesting looking at alternative investments such as commodities, amongst other inflation-protected assets, for a well-rounded portfolio that better reflects the real economy.
16. Asia looks set to be the key driver of growth for the global economy in the next decade. As a barometer for Asia’s growth, iron ore emerged as one of the best performing commodities since China’s exit from its Covid restrictions. Beyond China, urbanisation will continue to be a major theme in emerging Asian countries such as India, Indonesia and Vietnam.
17. This underscores the importance of SGX’s key role as a trusted and international venue for price discovery, where risk management is carried out using internationally recognised benchmarks, while meeting global regulatory demand as well as transparency and risk management standards.
18. We saw an expansion in participation for our iron ore contract, with record derivative volumes in 2022, on the back of heightened risk management and increasing financialisation of iron ore as a macro proxy for industralising Asia.
19. Beyond this, we want to facilitate collaboration and drive partnerships within the steel value chain. It is with this end in mind that we will continue to work with our partners to deliver this flagship conference in the coming years.
IN CLOSING
20. Over the course of the next few days, you will hear from a diverse lineup of keynote speakers and engaging panel discussions, focused on the steel industry’s latest developments and the sector’s potential and pursuit of sustainability.
21. I wish you all a fruitful week ahead. Thank you.
