SINGAPORE: Singapore Exchange Ltd (SGX) is considering a triple listing of steel derivatives, aiming to offer investors easier access to the highly fragmented ferrous market via a single platform, a senior executive said.
The listings would create a "virtual steel mill" designed to help investors gain exposure to market activity in China, the world's top steel producer and consumer.
"Potentially one long product, one flat product and one scrap product. It may be a triple listing," said William Chin, senior vice president and head of commodities derivatives at SGX, in an interview with Reuters on Thursday.
Exchange-traded products for steel and steel-making materials are currently spread across a number of global exchanges.
Shanghai Futures Exchange (ShFE) trades steel rebar futures used in construction, as well as hot-rolled coil and steel wire rod (SWRc1> used in manufacturing.
Dalian Commodity Exchange (DCE) offers iron ore futures , as well as coking coal and coke, used in blast furnaces. And London Metal Exchange (LME) and CME Group offer other futures products tied to the ferrous markets.
"The market is highly fragmented, but steel is a big, big product. We want to be able to leverage off our current participation in the feedstock to ... start trading steel derivatives," Chin said.
Under SGX, which already offers iron ore, coal and freight products, the new listings would allow for the first time access to key steel industry inputs and outputs over a single platform.
SGX will gauge industry interest in the proposed offerings at the Singapore Iron Ore Week conference next week, with a launch possibly sometime during the next 12 months, he said.
Chin said the proposed listings are expected to attract investors from beyond the steel sector who are looking to gain exposure to broader construction, manufacturing and environmental clean-up trends within China.
China remains buffeted by the ongoing trade war with the United States, and is also committed to a long-term reduction in industrial emissions that is expected to place greater emphasis on recycling of old materials.
"It's very clear that the long-term plan is to have clean air, blue skies ... and therefore scrap is going to be a fundamental source of material for China in terms of steel production, he said.