Singapore could dominate global commodity trade
Singapore has the potential to become the world's largest commodity trading hub in the decade ahead as trade flows shift towards Asia.
The Republic - already Asia's largest commodity trading hub - is well-placed to take advantage of rising demand for commodities like metals and agricultural products in the region, said Trade and Industry Minister (Industry) S. Iswaran.
He was speaking at the Global Trader Dialogue, a gathering of leaders in the global commodity trading community, at the National Gallery yesterday.
The commodities sector has had to grapple with a challenging operating environment in recent years, Mr Iswaran said.
Oil prices have fallen sharply, oversupply in the agri-commodities sector has squeezed margins and volatility is the new normal in the metals and minerals markets. But Singapore's commodity trading sector has remained resilient, the minister noted. Trade revenue in the sector grew at an average annual rate of 7 per cent over the past decade to reach almost US$900 billion (S$1.25 trillion) last year.
While "upstream" commodities producers have been hit hardest by global market volatility, most of the companies here are involved in "downstream" trading activities, said Mr Satvinder Singh, the assistant chief executive of IE Singapore. The trade agency is the government body driving the sector's growth here.
"When there's an oversupply situation, the downstream trading side needs to optimise on the supply to minimise losses... In good times, downstream companies prosper. In bad times, downstream companies are also very active," Mr Singh told The Straits Times in a separate interview about the sector's prospects.