Over 1,000 miners, steelmakers, traders, brokers, shippers, analysts and industry experts from across 20 countries came together in May for the 7^th annual Singapore Iron Ore Week (SIOW).
SIOW continues to be the leading global iron ore conference with a great diversity of events and participants - providing an excellent platform for networking and collaboration. Industry experts led thought-provoking discussions on key issues and market trends across the global steel value chain - in iron ore, coking coal, steel, scrap steel and dry bulk shipping.
Here are our 10 takeaways from the week of events, the full article is below.

1. From diverse risks and rising technology costs - the mining industry still faces multiple challenges
2. Volatility is back and likely to stay elevated - iron ore market jolts almost 50% higher on supply side shocks
3. Miners enjoy waves of higher prices after a long drift in the doldrums
4. China's short term steel prices, margins and demand surprise to the upside 
5. A less-than-rosy longer term picture for steel with US tariffs and China's implementation of harsher pollution-control measures
6. Shift to quality encourages pickup of SGX high grade 65% Fe iron ore contract
7. Coking coal prices of $200/mt are here to stay... for now
8. SGX is planning a triple listing of steel derivatives in the next 12 months
9. Historic market structure evolution toward Chinese scrap steel, and the rise of India
10. IMO 2020 low sulphur regulation promises further pain for subdued dry bulk shipping

1. Miners face multiple challenges from diverse risks and rising technology costs
The mining industry faces greater challenges than ever, said keynote speaker Cynthia Carroll, former CEO of Anglo American. Her long list of risks included more volatile market prices; stricter environmental and safety regulation; growing resource nationalism and trade tensions and declining ore quality and rising costs. She said that while China was tightening its environmental regulations, it will continue to need higher grade ores, despite consuming more scrap steel use from the secondary market. Iron ore prices may be expected to settle back from $95/tonne to around $65/tonne over time, but supply shocks, tighter mining laws and China's stricter environment regulatory policies may continue to hold prices up, Carroll concluded.
While the mining industry is investing heavily in R&D and the implementation of automation technology for safety and pollution standards, Carroll called on global miners to do more by declaring climate change goals and leading the way in innovation, transparency, IP protection, and Environmental, Social and Governance (ESG), to do good for all. Increasing digitalisation was expected soon in all aspects of physical commodities trading, with blockchain having the potential to reduce costs, cut paperwork and increase transparency in iron ore, added Julien Hall, Asia Metals Pricing Director at S&P Global Platts.

2. 'Volatility is back' - iron ore market jolts almost 50% higher on supply side shocks
Iron Ore had been drifting along with a breezy supply and steady tug of demand through a narrow channel of US$64-74 per metric ton through much of 2018. Little evidence of any price shock was on the macro horizon. Then on Jan 25, a collapsed dam at Brazilian iron ore giant Vale's Córrego de Feijão mine removed 50 million tons of export - over 2% of global supply. This supply-side shock, supported by further weather incidents in Brazil and Western Australia in the first quarter of 2019, flogged iron ore prices higher. Short-term volatility in iron ore derivatives has surged to 40%, the highest since mid-2017.
Traders and steelmakers have had to rush to cover themselves against further losses, or reposition for a higher price environment through the remainder of 2019.
3. Miners enjoy waves of higher prices after a long drift in the doldrums
Optimism has thus returned to suppliers of iron ore, in spite of the uncertainties of trade wars and moderated economic growth during the election season in Asia, noted Kwa Chong Seng, Chairman of Singapore Exchange (SGX). Factors like a weak Aussie dollar, soft freight, high iron ore prices and more Brazilian regulations are creating opportunities for Australian miners especially. Even in a decreasing steel demand scenario, miners saw prices of steelmaking raw materials remaining lofty.
Major miners like Rio Tinto were reacting with more sales flexibility, offering smaller volumes of lower grade iron ore, selling cargoes using a basket of price indices, and allowing greater optionality for customers, said Simon Farry, VP of Sales & Marketing. Fortescue Metals Group was targeting 40 million tons per year of 60.1% Fe iron ore from its new Eliwana mine in West Pilbara, and 22 wmtpa of 67% Fe magnetite from Iron Bridge, said COO Greg Lilleyman.

4. China's short term steel prices, margins and demand surprise to the upside 
Contradictory short and long term signals made reading of China's iron ore demand and steel output a harder job than normal for analysts this year. On the one hand, China's steel production in Q1, 2019 at 231 million tons was up 10% on 2018 and the highest for any first quarter on record. Steel prices kept ahead of rising raw material prices, given that steel was already tight in China over winter months. While ex-China markets have felt the pinch of reduced supply of iron ore pellets from Vale, Chinese steelmakers stayed relatively cool for low-alumina Brazilian fines, given a cushion of port stocks and the availability of low-alumina domestic concentrate from local mines.
Meanwhile, Chinese metal demand - a function of credit availability for local governments and businesses - has had its sails filled by a strong state-approved credit injection during the first quarter, 40% higher than last year. With rising home prices and a strong GDP call for China of 6.4%, analysts painted the picture of a stimulus-driven recovery. Some saw steel demand, prices and margins holding up if Beijing rolls forward with tax cuts, issuance of infrastructure bonds, and construction of steel-intensive ports, highways and rail under its Belt & Road Initiative (BRI).

5. US tariffs, China Blue Skies policy, new capacity pressurize steel industry long term
At the same time, the longer term picture for steel looked far from rosy. Renewed competition between the US and China on tariffs could impact global growth. While the trade war weighs on Chinese consumer sentiment, it doesn't have a direct impact on China's steel sector, analysts reasoned. China's steel demand is unlikely to sustain at Q1 levels, China Iron & Steel Association (CISA) said, arguing that China's economic restructuring will lead to less intensive demand for steel. "Infrastructure investment has dropped from double digit growth but is still significant at 8% and the central government has made commitments to infrastructure financing," said Wu Jing Jing, Deputy General Director.
Other analysts pointed even further to the dark horizon, where China faces macro and geopolitical cross-winds of accumulating debt, ageing demographics and environmental pressures on heavy industry such as mining and steelmaking. Market participants expected Beijing's implementation of pollution-control measures to be stricter year on year, with anti-smog measures in the coming months leading to steel supply falling more sharply than demand.

6. Shift to quality encourages pickup of SGX high grade 65% Fe iron ore contract
China has now shifted its focus in the battle for clean air to the steel industry after targeting coal-powered plants, the former top polluter. The Ministry of Ecology and Environment has released a directive to ensure steel mills in the country's most polluted regions meet "ultra-low" emission standards by 2025. Rising environmental standards in China are driving demand for high grade ore; less demand for imported coking coal due to greater need for (less tons of) higher grade iron ore; and greater demand for high grade ore hedging tools.
Singapore Exchange (SGX) has already seen 50 market participants in its new high grade 65% Fe futures contract, with 5-million tons of trade. New 65-62% Fe spread trading has become useful for steel mill margin hedging. "Basis risk against benchmark 62% Fe for the more complex suite of modern market products makes hedging with the 65% Fe contract highly complementary," commented Shawn Teo, GM of Ferrous Raw Materials at Mitsubishi Corp. Iron ore quality differentials now have different drivers, making 65% Fe contract a valuable tool, added Siddarth Aggarwal, Manager of Market Analysis at Anglo American. Meanwhile, China's Dalian Commodity Exchange is exploring the potential for iron ore options for international participants, more bonded delivery points, and more deliverable iron ore grades, said Li Ning, its Singapore Chief Representative.

7. Coking coal prices of $200/mt are here to stay ... for now
Premium hard metallurgical (coking) coal prices basis FOB Australia have held more or less above $200 per metric ton since the end of January and looked to stay that way, earning healthy margins for miners whose costs were below $150/mt. On the supply side, Australian mines have struggled since the start of the year and were still producing short of pre-Cyclone Debbie levels (of March 2017). Following reduced investments in 'dirty' thermal coal worldwide, knock-on reductions in investment in coking coal meant that the Australian monopoly of premium hard coking coals was likely here to stay, maintaining industry vulnerability to concentrated supply chain shocks.
China's domestic coking coal production has not increased in 4 years while demand has increased, so imports have risen 35% year-on-year. South Asian met coal import demand was also expected to increase. However, the spanner in the works was Chinese policy moving towards increasing use of scrap metal for steel production rather than through the blast furnace method. If the Chinese government pushes ahead with this plan ahead of expectations, coking coal demand would drop quickly. Thus volatility in coking coal was expected over the next few years and risk management deemed essential.

8. Singapore Exchange (SGX) looks to triple listing of steel derivatives
Singapore Exchange is considering a triple listing of steel derivatives, said William Chin, Head of Commodities Derivatives. The listings would create a "virtual steel mill" designed to help investors gain exposure to market activity in China. "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," he said in an interview with Reuters.
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. 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. "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 observed.

9. Historic market structure evolution toward Chinese scrap steel, and the rise of India
Greater use of ferrous scrap as a feedstock is way for China to reduce its environmental burden and overcapacity of its steel production. More efficient converters in China were already using 30-40% of scrap to make steel, but scrap prices are high, and surplus steel exports from China are only a short term tactical play whenever margins are good, Zhou Guoquan, VP of Zenith Steel explained. Steel exports were down for the third year in a row from a peak of 112 million to 70 million tons, and were only a relief valve for weak domestic markets, said Platts. Global steel demand is also peaking on a structural collapse in car demand, especially in China, Europe, and Japan. But steel demand for infrastructure was still seen in Asia mega projects and renegotiated BRI projects.
China is soon no longer going to be the driver of steel growth, with India replacing it. But at only 106.5 mil tons of crude steel production, India could not easily fill this gap, even if growing at 5% rates, SteelMint said. And as India builds more than 200 mil tons/year of steel capacity, only 8% of its steel demand will be met by imports, said He Ming, Head of China Bulks Research at Wood Mackenzie. Meanwhile, Southeast Asia was catching up fast on Korea as major scrap steel importers.

10. IMO 2020 low sulphur regulation promises further pain for subdued dry bulk shipping
Dry bulk freight markets were being pummeled by the twin loss of iron ore shipped from Brazil to Asia, and a recurring swine flu epidemic in China eating into soybean shipments. Freight prices, dragged down 40% to $11.40/wmt on the Brazil-China C3 route in March, were expected to 'normalise' in Q2, but with no guarantees of return to the baseload supplies from Brazil. For shipowners this made for a tough situation, with many vessel classes such as capesizes oversupplied and under-demanded. Worse, new builds for smaller owners and the renewal of fleets for larger owners still came all too easy with cheap money; and demolitions had slowed in 2018 on recovered earnings.
New institutional investors were attracted by the extreme 30-day volatility for forward freight agreements (FFAs) of capesize and panamax vessels, greater than commodities or equities, said Tom Lloyd Hughes, Commercial Director at FIS. Dry bulk commodity and shipping market participants also looked ahead to the once-in-a-decade risk event of the IMO cutting sulphur in shipping bunker fuel from 2020. The IMO ruling promises also to raise bunker prices for dry bulk freight vessels carrying ores, coals and steel globally. Non-scrubber fitted ships arriving in Singapore with non-IMO 2020 compliant fuel will have to undergo the costly exercise of replacing that fuel with compliant fuel before being allowed to leave port, the Maritime & Port Authority (MPA) warned at TradeWinds' shipowners forum.