Wednesday, 24 Aug 2011
Reuters reported that Standard Bank started to trade iron ore swaps this year, chiefly as an add on to its expanding physical iron ore business and this derivatives activity is attracting ever more customer interest.
Mr Jim Coupland global head of base metals and bulk commodities, told Reuters in an interview that “We see the key being the physical flow and the derivatives being an add on to manage price risk. We started to trade iron ore swaps this year mainly to manage our prices risk, but from a customers' point of view it has also become more interesting.”
He added “We have already concluded some long term iron ore off takes in Sweden, Latin America and Australia and we are actively trading material in China as well.”
Iron ore swaps allow producers, consumers and financial market participants to hedge or bet on prices in the future. A number of investment banks have started to trade iron ore swaps in the last few months. Some, including Citi and Goldman Sachs are also looking at physical iron ore trading, attracted by large market volumes that mean potentially high returns.
Standard Bank also started trading physical steel products such as billet and scrap last year and is active in steel derivatives such as rebar on the Shanghai Futures Exchange and billet in the London Metal Exchange.
Standard Bank physical steel and iron ore traders are based in Shanghai, Hong Kong, Singapore and London while the bulk of the risk management team is based in Singapore.
(Sourced Thomson Reuters)
Reuters reported that Standard Bank started to trade iron ore swaps this year, chiefly as an add on to its expanding physical iron ore business and this derivatives activity is attracting ever more customer interest.
Mr Jim Coupland global head of base metals and bulk commodities, told Reuters in an interview that “We see the key being the physical flow and the derivatives being an add on to manage price risk. We started to trade iron ore swaps this year mainly to manage our prices risk, but from a customers' point of view it has also become more interesting.”
He added “We have already concluded some long term iron ore off takes in Sweden, Latin America and Australia and we are actively trading material in China as well.”
Iron ore swaps allow producers, consumers and financial market participants to hedge or bet on prices in the future. A number of investment banks have started to trade iron ore swaps in the last few months. Some, including Citi and Goldman Sachs are also looking at physical iron ore trading, attracted by large market volumes that mean potentially high returns.
Standard Bank also started trading physical steel products such as billet and scrap last year and is active in steel derivatives such as rebar on the Shanghai Futures Exchange and billet in the London Metal Exchange.
Standard Bank physical steel and iron ore traders are based in Shanghai, Hong Kong, Singapore and London while the bulk of the risk management team is based in Singapore.
(Sourced Thomson Reuters)
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