SICOM benchmark for Indian rubber market
Indian rubber companies have set up offices in Singapore to trade and import rubber for the domestic market. Tan Tee Yong, Director, Rubber Commodities at the #Singapore Exchange, says the contract will help in hedging and risk management.
Q: How do you see Indian rubber importers trading in Singapore?
Tan: We observe that more Indian tyre manufacturers and rubber consumers have been reaching out to South-East Asian rubber producers to secure supply.
Some of them have established offices in Singapore to be plugged into the services and network of the global rubber trading hub. All the major rubber producers have regional offices in Singapore, underlining our strategic location as the global price-discovery centre for rubber.
Can you elaborate on SICOM’s role in helping Indian businesses trade rubber?
Tan: #Singapore Commodity Exchange (SICOM) of SGX trades in coffee and rubber contracts.
SICOM futures is the global rubber physical benchmark, used extensively by rubber producers across South-East Asia countries and other emerging origins as pricing references in their long-term contracts and also for spot cargoes.
Therefore, SICOM prices are set to feature more prominently in the business decision making of Indian rubber traders, and SICOM as a platform will become more crucial to them for hedging and risk management.
Q: Are Indians familiar with Singapore rubber contracts/SICOM contracts?
Tan: SICOM operates two rubber futures contracts, one for #TSR20 and another for #RSS3.
Both contracts are traded in 12 consecutive calendar months and in lots of 5 metric tonnes.
They are physically deliverable, and rubber supplies from SICOM Approved Factories in three origins – Indonesia, Malaysia and Thailand – are accepted.
Our list of Approved Factories is internationally recognised and sought after as a mark of quality assurance.
The combined SICOM futures volumes in 2016 surged to a record of 1,413,696 lots (7,068,480 MT), an increase of 116% from a year earlier.
A single-day record volume of 18,365 lots was traded on 14 December 2016. SICOM open interest averaged 50,631 lots in 2016, up 56% from the previous year.
This underlines the importance of SICOM prices to the global rubber market. fii-news.com
