Author: diesel2904

May 5, 2017

After another busy week in the Metal Bulletin offices, we take a look back at some of the big stories.

Base metals Chinese cathode exports are largely responsible for this week’s surge in LME copper inventories, with a trading party using a series of smelter offtake agreements and long-term contracts to deliver material onto the exchange, sources with knowledge of the matter told Metal Bulletin. The dismissal of Regina Lopez from her role as chief of the Philippines’ Department of Environment and Natural Resources (DENR) on Wednesday May 3 removed an uncertainty but also a prop for nickel prices. And nickel prices were under pressure as a result of the developments in the Philippines, and the increasing likelihood of a surge in laterite ore exports from the country. Viant Commodities, a Singapore-based metals trading firm set up in 2016, meanwhile, reported…

April 9, 2017

Serial Systems is acquiring a majority stake in Print IQ, VIant Commodities has launched a Swiss JV and VIbrant Group is enlarging its stake in Sabana REIT’s manager. Serial Systems acquires 70% of Print IQ Serial Systems is acquiring a 70 per cent stake in Singapore-incorporated Print IQ in an effort to grow additional income streams, with a view to enhancing long-term shareholder value. The seller is Ong Chin Teng.  The privately-owned firm is principally engaged in the business of providing managed print services, and the administration, maintenance and distribution of copiers and printers. It has an issued and paid-up capital of S$200,000. 

The purchase consideration for this equity stake is S$331,000 and will be funded by internal funds and/or bank borrowings. Goh Su Teng, a director of Serial System International, and Phillip Foster Warren, VP of Serial Microelectronics, another subsidiary of the group, are also acquiring 5 per cent each of Print IQ from Ong, paying S$21,000 each for their respective interest. Viant Commodities launches JV with MKE in Switzerland Singapore’s Viant Commodities has launched a Swiss joint venture (JV) with European copper products maker KME. The JV firm is called Tekvalia AG and willfocus on trading and distribution of copper products and services through the supply chain in Europe. In an interaction with Reuters, Viant Commodities Managing Director Rene van der Kam explained: “Viant in Singapore is very well capitalised, and it is enjoying very strong support from its banks, and we will leverage that to our European entities. 

Tekvalia is not a sourcer to, or off-taker from KME. If that happens at all, it will be at arms’ length. This is really to facilitate third-party business.” Tekvalia AG will be owned 51 per cent by Viant and 49 per cent by KME. Viant will retain its own Viant Commodities AG entity, launched in March, run by Vadim Linchevsky. Viant Commodities was launched in June 2016 as a trading house with offices in Singapore, Hong Kong and Shanghai and maintains 15 staff. It will offer structuring and some financing along the value chain including for scrap, semi-refined and finished products. Vibrant Group to enlarge stake in Sabana REIT’s manager Vibrant Group is acquiring a further 45 per cent stake in the manager of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (REIT). The transaction is expected to be completed before 28 April 2017. Vibrant also owns 51 per cent of the REIT manager and controls 12 per cent of Sabana REIT’s units. The acquisition of an enlarged stake by Vibrant of Sabana REIT’s manager – during an ongoing strategic review-  will strengthen its negotiating position in the event of an acquisition. This is the day of an extraordinary general meeting (EGM) scheduled for unitholders to vote on resolutions that include removing the REIT’s manager and follows distress over declining distributions per unit that the REIT has been distributing over the last three years. Meanwhile, fees paid to the REIT manager remain stable. 

Through a discounted rights issue last year, it tapped unitholders for cash. Moreover, it has proposed future acquisitions which are not forecast to be yield accretive. The embattled REIT is expected to face further troubles, with dissident shareholders holding 0.6 pe rcent of its outstanding units expected to face significant difficulty in changing the manager. Substantial unitholders of Sabana REIT are E-Shang Redwood (ESR), a unit of private equity (PE) major Warburg Pincus, with a 5.01 per cent stake. ESR recently aacquired an 80 per cent stake in Cambridge Industrial Trust’s manager and 12 per cent of the REIT. Chinese property tycoon Tong Jinquan holds a 16 per cent stake in Cambridge Industrial Trust and 6.19 per cent of Sabana REIT. 

April 5, 2017

Singapore’s Viant Commodities PTE Ltd said on Wednesday it has launched a joint venture with European copper products maker KME in Switzerland.

The venture, Tekvalia AG, will be based in Zug and will focus on trading and distribution of copper products and services through the supply chain in Europe, Viant Commodities Managing Director Rene van der Kam told Reuters.

“Viant in Singapore is very well capitalized, and it is enjoying very strong support from its banks, and we will leverage that to our European entities,” van der Kam said.

“Tekvalia is not a sourcer to, or off-taker from KME,” he said. “If that happens at all, it will be at arms’ length. This is really to facilitate third-party business.”

Tekvalia will be owned 51 percent by Viant and 49 percent. KME. 

KME is one of the world’s biggest copper product makers, with 15 production plants including in Germany, France, Italy Spain, China and the US, and is unit of Italy’s diversified Intek Group SpA (IKG.MI).

Van der Kam set up Viant Commodities in June last year with offices in Singapore, Hong Kong and Shanghai and 15 staff, after Gunvor dismantled its metals trading business.

The trading house will offer structuring and some financing along the value chain including for scrap, semi-refined and finished products. It will retain its own Viant Commodities AG entity, launched in March, run by Vadim Linchevsky.

(Reporting by Melanie Burton; Editing by Kenneth Maxwell)

August 8, 2016

A flurry of new metal trading desks that has sprung up this year reflects an industry realignment as bigger players downsize, but in a market still strapped for capital only the thriftiest will survive, industry sources said.

At least six companies have won a mandate to expand their metals businesses in the past six months, backed by Chinese and private capital, often set up by traders who have left large merchants.

Hartree Capital, Viant Commodities, state-owned China aluminium maker Chalco and mid-size Kyen Resources are among firms that have made fresh investments into metals in the past few months, with new hires from commodity trading houses like Swiss-based Gunvor and Noble.

They follow in the footseps of Geneva-headquartered Zopco and London-based Concord Resources that were set up late last year, helping to stem a tide of departures that has thinned the ranks of the industry since 2011.

The smaller, more nimble players are seeking to fill a void left by the exit of banks and hedge funds from metals markets in recent years, said analyst Robin Bhar of Societe Generale in London.

Some of the new ventures are backed by private equity groups, and a few have put in their own funds, leading to smaller overall trade books and sometimes more tightly-controlled investment and trading decisions.

“If they can set up now and take advantage of a market recovery they’ll get a good deal … whether they have enough cash resources or the backing remains to be seen,” said Bhar.

The hires have come in part after large commodity merchants downscaled their metals desks to focus on oil where a contango structure – when forward prices are higher than spot – has offered easy paper gains.

This pushed some metals traders to seek new roles or set up their own shops.

Gunvor dismantled its Singapore-based metals business in February and its global head of metals, Rene van der Kam, set up Viant Commodities in June with offices in Singapore, Hong Kong and Shanghai and 15 staff.

As big traders focused on big deals to ramp up revenue, niches opened up to service more traditional, smaller clients.

“What we noticed, is that as our large trading company grew and grew, so did their appetite in terms of size of deal,” said one industry source who has set up a desk in the past year.

“Smaller producers with less than 1,000 tonnes a month were dropping off the radar. A lot of traders have focused exclusively on sales into China and that comes at the expense of servicing the world,” he said.

LOOKING FORWARD

Chinese money flowing into metals shops is in part from state-owned enterprises taking a long-term view of the cycle, while private equity supporters are opting to buy a team cheaply that can eke out a profit near the bottom, and be primed to reap the rewards when the cycle turns, said analysts and investors.

“Private equity thinks this bear market is getting a bit long in the tooth,” said an industry source in New York, but he questioned how many new shops will make money.

The market has become tougher as rockbottom interest rates hollowed out margins and changes to London Metal Exchange (LME) warehouse rules deflated once lucrative premiums to ship metal.

But giant merchants like Trafigura have been able to ride out the five-year bear trend, dominating large volume trade and holding on to the top tier of clients

“This market is tough. There is not a lot of money to be made,” said a private equity source active in commodities.

“Not that many people are making money in financial trading. In physical markets and metals, everyone I speak to is one step short of disaster.”

The daily value of the copper contract on the Chicago Mercantile Exchange (CME) more than halved to $8.6 billion in February from a 2011 peak of $18.8 billion. It has since recovered to $10.2 billion.

Still, more firms are hiring. Hartree, half owned by PE giant Oaktree Capital, took on three metals traders for its London office last month. It is also building out a presence in Shanghai, two sources familiar with the matter said.

“For private equity it makes sense with interest rates so low, it’s one of the better asset classes,” another industry source said.

“I don’t think anyone is calling for a reacceleration of China but there is opportunity to trade around fundamentals – zinc is up 40 percent this year. As long as the market is doing what you expect then you can make money.”

(Reporting by Melanie Burton in MELBOURNE. Additional reporting by Florence Tan in SINGAPORE and Josephine Mason in NEW YORK.; Editing by Richard Pullin)