Nomura to Boost Asia Commodity Trading as China Demand Gains
Nomura to Boost Asia Commodity Trading
Qilai Shen/Bloomberg
A conveyer belt dumps iron ore into a pile at an iron ore transfer and storage center operated by the Shanghai International Port Group in Shanghai.
A conveyer belt dumps iron ore into a pile at an iron ore transfer and storage center operated by the Shanghai International Port Group in Shanghai. Photographer: Qilai Shen/Bloomberg
Nomura to Boost Asia Commodity Trading as China Demand Gains
Tomohiro Ohsumi/Bloomberg
Pedestrians walk past the Nomura Holdings Inc. headquarters in Tokyo. In February, the company bought Nexen Inc.’s European business, a power and gas physical-trading operation.
Pedestrians walk past the Nomura Holdings Inc. headquarters in Tokyo. In February, the company bought Nexen Inc.’s European business, a power and gas physical-trading operation. Photographer: Tomohiro Ohsumi/Bloomberg
Nomura Holdings Inc. plans to boost commodity trading in Asia, betting China will lead a global revival in demand for iron ore, coal and metals.
“We’ll significantly expand our commodities presence over the next 12 to 18 months,” Sean Brecker, Nomura’s head of commodities trading in Asia excluding Japan, said in an interview in Singapore, without giving further details. “We expect Asia ex-Japan to be a major engine for growth over the next decade.”
Iron ore may lead an increase in demand for resources in the coming year, similar to coal’s rally in 2006 to 2007, he said. Concern over the pace of recovery in the U.S. and Europe will cap oil and gold at least into 2011, he said.
Prices of exchange-traded commodities such as crude and copper have stalled this year amid speculation economic growth may falter. Oil is up 3.7 percent in New York, after surging 78 percent in 2009, while copper in London has gained 0.7 percent, compared with 140 percent last year. Gold is up 8.5 percent so far this year.
“There’s been a lot of buzz about iron ore, a market that has moved away from long-term, price-negotiated contracts into more of a spot market,” Brecker said. “It looks and feels a lot like the coal market did a few years ago and we’ve seen how the market for coal derivatives has taken off.”
Banks and trading houses including Standard Chartered Ltd., Australia & New Zealand Banking Group Ltd., Citigroup Inc., Noble Group Ltd. and Trafigura Beheer BV are hiring traders in Singapore amid rising demand in the region for commodities.
Hiring, Acquisitions
Nomura hired Shaun Lim in June from Barclays Capital as head of crude and oil-products trading for Asia excluding Japan. In February, the company bought Nexen Inc.’s European business, a power and gas physical-trading operation. It already offers hedging in oil, energy, precious and industrial metals, agricultural products and commodities such as carbon and uranium.
The company entered the commodities business in June 2007 by forming an alliance with Sydney-based Macquarie Bank Ltd. It dissolved the partnership after the acquisition of Asian units from Lehman Brothers Holdings Inc. in 2008.
Brecker, 35 moved to Nomura as part of the deal with Lehman, which he joined in 2003 in London before relocating to Singapore in 2007. Prior to his Masters of Business Administration from the Wharton School of the University of Pennsylvania, he was a credit-research analyst at JPMorgan Securities in New York.
Nomura recommends buying platinum versus gold as car sales in China, the world’s biggest automobiles market, bolster demand for the metal used in catalytic converters. China’s State Information Center estimated car sales will increase 17 percent this year to 16 million.
China ‘Robust’
“Among major commodity-consuming economies, the strongest growth appears to be coming from China, and the demand-side picture for copper and iron ore from China looks very robust,” Brecker said in the July 29 interview. Still, any slowdown in U.S. and European economic recovery may have “a knock-on effect” on China in the short term, which may sap demand for commodities, he said.
Coal prices in Newcastle, the world’s largest export harbor for the fuel used in power plants, surged 41 percent in 2006 and 73 percent in 2007 as China stepped up purchases to meet demand for electricity.
Iron ore isn’t traded on exchanges, while volume for Central Appalachian coal contracts in New York was about 480 in June, compared with more than 600,000 for crude, according to data from CME Group Inc.
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net
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