Singapore Exchange reports April derivatives volume surged on iron ore upheaval

Stock ticker at SGX building on Shenton Way; taken October 2018.Stock ticker at SGX building.

Singapore Exchange reported Thursday its overall commodity derivatives volume jumped 64 percent on-year in April, amid upheaval in the iron-ore industry.

“The iron ore industry is going through one of the most volatile periods in its history, following ongoing uncertainties around supply disruptions in Brazil and Australia, as well as declining domestic stockpiles in China,” SGX said in a statement filed to the exchange.

“These uncertainties around supply, coupled with unpredictable steel margins, are likely to keep iron ore price volatility high and continue to drive a need for steel raw materials price risk management,” it added.

Because iron-ore trade flows are a primary driver of Capesize freight rates, ,demand for freight-rate hedges increased as market participants aimed to avoid a hit from unexpected changes to shipping costs, SGX said.

Volumes of iron ore and freight derivatives increased 73 percent and 53 percent on-year respectively in April, SGX said, noting total derivatives traded volume increased 37 percent on-year to 20.8 million contracts.

In addition, with market participants focused on China, with portfolio managers hedging their equity and currency exposures, SGX said. Recent developments in China have included a renewal of tensions over the U.S. trade war.

Traded volumes of the SGX FTSE China A50 Index futures and the SGX USD/CNH futures jumped 83 percent and 111 percent on-year respectively, SGX said.

Total securities market turnover by volume rose 7 percent on-month to 22.9 billion shares, driven mainly by the real estate and consumer segments, SGX said.

The securities daily average value rose 2 percent on-month to S$1.05 billion, and the market turnover value for exchange-traded funds (ETFs) rose 44 percent to S$195 million, the statement said.

In addition, SGX said there were 145 new bond listings in April, raising S$61.7 billion, compared with 85 bond listings raising S$46.8 billion in the year-ago period.


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