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[SINGAPORE] As Singapore turns 60 this weekend, its journey from colonial rubber-trading outpost to one of the most sophisticated commodities powerhouses in the world reveals a lesser-known story: how a nation with no natural resources rewrote global trade rules by mastering the financial alchemy of risk.

In 2024, global traders conducted US$1.9 trillion worth of international commodity trades here, representing a 40 per cent increase from a decade ago, notes Amreeta Eng, executive director for trade at Enterprise Singapore.

The Republic also acts as a central node for price discovery in key commodities, from natural rubber to refined oil products. Singapore houses almost 400 international commodity players, Eng tells The Business Times.

Beyond moving goods, Singapore’s power lies in its role as a global risk-management capital, where its neutral and well-governed ecosystem plays an increasingly important role amid geopolitical tensions and trade disruptions.

“Commodity players have established a significant presence here to tap our comprehensive trade ecosystem that offers access to networks, financing and talent,” says Eng.

Rubber legacy

Singapore’s commodity roots stretch back to the 19th century, when British planters and local labourers turned the island into a rubber export hub for Western markets.

By the 1960s, it was processing one-third of global natural rubber – a legacy that led to the creation of the Singapore Commodity Exchange, later acquired by Singapore Exchange (SGX) in 2008.

SGX’s rubber derivatives revolutionised the once-opaque market with transparent price discovery and hedging tools. Today, SGX’s rubber futures trade 18 times their 2010 volume; they command 90 per cent of the global seaborne derivatives market, and set benchmarks for players around the world, from Thai farmers to tyre maker Michelin.

“Singapore provides a liquid and strong futures market to the physical rubber community, a key to conduct businesses in the commodity space,” says Michael Coleman, a veteran trader. With derivatives volumes now surpassing physical trade, he notes that “the price of liquidity is volatility, and businesses need both to survive”.

Peter Tan, chairman of the Rubber Contract Dispute Resolution Committee and an industry consultant, credits Singapore’s success to its neutrality and ecosystem. “From the Botanic Gardens’ first rubber seedlings to today’s financial and arbitration infrastructure, we’ve built a global meeting point and ecosystem for trade.”

Oil fuels

Besides rubber, another major commodity for the Malay Archipelago’s economy before independence was oil, also a cornerstone of Singapore’s growth story.

Strategic tax incentives and infrastructure investments after 1965 lured energy giants such as Shell and ExxonMobil (then known as Esso and Mobil) to Singapore, positioning the Republic as Asia’s refining hub.

Energy veteran Kho Hui Meng notes that Singapore’s first-mover advantage – combining world-class logistics with pro-business policies – allowed it to capitalise on Asia’s economic boom.

In the 1980s, Platts’ Singapore oil benchmarks turned the city into Asia’s price-setting nerve centre, where only players with physical assets here could participate in market-making. This established Singapore as the pricing centre for petroleum products east of Suez, even up to today, says Kho.

The reclamation of Jurong Island in the 2000s took this further, creating an integrated energy and chemicals cluster that now houses over 100 companies powering regional energy trade.

Tan Chee Chung, president of Shell International Eastern Trading, calls Singapore a “key pillar” of Shell’s global trading network. Here, Shell has expanded from crude oil to liquefied natural gas (LNG), sustainable aviation fuel, and electric vehicle (EV) charging – proof of the hub’s relentless evolution with “consistent policies, connectivity, and deep talent pool”, he adds.

Similarly, Geraldine Chin, ExxonMobil Asia-Pacific’s chair and managing director, highlights the company’s six-decade evolution alongside Singapore, where its manufacturing capabilities serve exports across Asia Pacific. The company has also expanded its trading portfolio to include LNG, sustainable aviation fuels and bio-based marine fuels in the city-state.

Risk revolution

Singapore’s port infrastructure and global connectivity have cemented its status as a premier trading hub, with maritime activities contributing over 6 per cent to GDP.

The ecosystem has continued evolving with sophisticated risk-management tools, particularly after SGX’s 2016 Baltic Exchange acquisition, which made it the world’s largest dry bulk forward freight agreement clearing venue.

These derivatives, complementary to SGX’s iron ore contracts, provide critical hedging for Asia’s trade flows.

SGX Group’s head of commodity derivatives Tan Tee Yong notes that geopolitical shocks and port disruptions ripple through supply chains at rising speed and scale; such freight derivatives, he adds, provide critical shock absorbers, keeping trade flows even under stress.

Tan also points out that these instruments mirror Asia’s trade realities. “What SGX has built does not just manage risk, it also anchors confidence in Singapore’s ability to intermediate global flows.

“Although neither a major producer nor consumer, Singapore and SGX have collectively been building the infrastructure that markets need, benchmark contracts that are neutral, trusted and reflective of physical fundamentals. That approach began with rubber, and continues across iron ore, freight and more.”

Continuous support

Singapore’s dynamic commodities ecosystem, with government support through schemes such as the Global Trader Programme, has attracted global giants while propelling local players onto the world stage.

When Australian resources giant BHP moved its global commercial hub to Singapore 25 years ago, it found “a strategic platform for growth”, says its group sales and marketing officer Michiel Hovers.

“There are parallels between Singapore’s development over the past 60 years and the emergence of South-east Asia as a large consuming base for some of our commodities,” Hovers notes. He adds that BHP runs every commodity on its portfolio from Singapore, from copper to uranium. This will also include potash, once BHP’s potash mine in Canada is up and running.

Home-grown Winning International’s chairman Sun Xiushun, meanwhile, credits Singapore’s “world-class hub for maritime logistics, commodity trading and energy supply” for enabling the firm’s global bauxite trade and Simandou iron ore development. “It’s more than a base; it’s a gateway to global impact.”

Enterprise Singapore’s Eng confirms this trajectory, citing growing demand for LNG, carbon credits and metals for EVs. “We will continue supporting companies to expand their Singapore operations.”