Optimism spreads among Singapore's traders The mood among the Singapore-based commodities trading industry - traditionally a reliable barometer of the health of Asian demand for raw materials - has shifted a few gears up. Six months ago, sentiment among the usually optimistic trading community was surprisingly downbeat. It was an alarming sign that preceded a price correction in China-leveraged commodities such as iron ore. Now, Singapore-based traders are again feeling somewhat upbeat. "The worst is behind us," says a senior executive at major commodities trading house, echoing a widely-held view in the city. The Asia head of commodities at a major bank adds: "China has clearly bottomed out." But while Singapore-based traders are more optimistic than six months ago, they are not anticipating the return of the days of wine and roses. One veteran executive summarises the cautious view: "We are up from the lows, but we are not racing for the highs." China's economic and commodities data supports the improved sentiment. The HSBC purchasing managers' index, which measures activity in the manufacturing sector, has recovered from the lows of the summer; hitting a three-month high in October. At the same time, crude oil consumption last month jumped to a record of 9.8m barrels a day, up nearly 9 per cent year-on-year, the biggest increase since early 2011, according to industry estimates. Even steel production, one of the biggest victims of the slowdown earlier in the year, rose last month while inventories fell, a sign the output increase was met by rising consumption. And Chinese iron ore imports rose last month to 65m tonnes, a 20-month high, as steelmakers restocked. The best indication of the improved sentiment is the change in the language. Six months ago, Singapore-based commodities traders told me about a "slowdown in demand," "mounting stocks," and "defaults and deferrals" in shipments. This time, the talk is about "stabilisation" of demand, "slight pick up in consumption" and "falling inventories at the ports." The pick-up in economic growth and somewhat stronger demand have been enough to convince commodities traders that China is not going to suffer a hard landing. Yet, economic growth remains much slower than in the past. China will undershoot its traditional 8 per cent growth target this year for the first time since 1999. Nevertheless, the better mood in Singapore is not only a reflection of a pick-up in Chinese economic activity - and the hope of a stimulus package after the once-in-a-decade political leadership change in November - but also of positive economic signs in south-east Asian countries, including Indonesia and Malaysia. If the change in sentiment holds and demand improves, it could be powerfully bullish for prices as many traders have invariably positioned themselves on the short side of the market. The pick-up could also mean stronger than expected annual price contracts. In effect, the shift in sentiment could be the signal that the bottom pickers were looking for.