Overlander Leads Sucden to Metals-Trading Dominance: Commodities

Michael Overlander’s first job was sorting copper from brass in a scrapyard north of London. Four decades later, he runs the biggest floor-trading team on the world’s largest metals bourse.

Sucden Financial Ltd., where Overlander is chief executive officer, handles about 15 percent of contracts traded on the London Metal Exchange, which controls more than 80 percent of global trade in industrial-metal futures. The brokerage is expanding in Asia and moving to bigger Hong Kong offices after China’s share of global copper demand more than doubled to about 40 percent in the past 10 years.

The expansion is occurring at the same time as the LME’s $2.2 billion takeover by Hong Kong Exchanges & Clearing Ltd. Overlander, who sits on the LME’s board, backed that deal amid rival offers from Intercontinental Exchange Inc. and CME Group Inc. in part because of the opportunities it may offer in China, also the biggest buyer of everything from aluminum to zinc. The LME’s network of more than 600 warehouses, ensuring physical delivery against futures, doesn’t include any in China.

“Undoubtedly they will have the capability to unpick some of the locks to the doors that had previously been closed,” Overlander said in an interview from his third-floor office in London’s financial district, about a five-minute walk from the LME. “The Chinese authorities are obviously close to making more brokers or naming and authorizing a number of companies to become overseas brokers.”

Open Outcry

Overlander joined the board of Sucden, a unit of closely held Sucres et Denrees SA, in 1984 and took over as sole CEO, managing director, in 1998, according to U.K. Companies House filings. The 60-year-old’s strategy in Asia, where he increased the Hong Kong team to 10 people from three, is consistent with his firm’s four-decade push to expand beyond its original sugar brokerage business.

Coffee and cocoa were added in the mid-1970s, foreign exchange in the 1980s and Sucden became a member of the LME’s 6- meter-wide (20-foot) open-outcry ring in 1994. Sucden’s LME team of 27 people works alongside JPMorgan Chase & Co., Societe Generale SA, Barclays Plc and eight other so-called Category 1 members.

The move into metals preceded a bull market that erupted in 2001 as mining companies failed to keep pace with demand from China and other emerging markets, creating shortages of everything from nickel to tin to zinc. The 135-year-old LME handled $15.4 trillion of trade last year, compared with about $2.5 trillion in 1999. The price of copper, its biggest contract by value, rose more than fourfold. It’s $8,288 a metric ton today compared with a record $10,190 in February 2011.

Bull Market

The bull market may now be threatened after China’s growth slowed for six consecutive quarters. The 17-nation euro area won’t expand again until the second quarter next year, based on the median of 24 economist estimates compiled by Bloomberg. International Monetary Fund Managing Director Christine Lagarde said Sept. 24 that the global economy may be “a bit weaker” than the Washington-based group forecast in July.

Overlander’s role in the global metals trade contrasts with his days as a 16-year-old sorting through drums of scrap for Mountstar Metals in the market town of Biggleswade, a job secured by his father who worked in metals recycling. He later moved to the company’s office in London, where in the basement he prepared flasks of mercury for transportation working for billionaire investor David Reuben.

Milking Cows

After a year he went to a kibbutz in Mahanaim, Israel, to milk cows for nine months, he said in interviews last month. On his return, he worked as a clerk at the LME for six months for V. Kaye before managing a factory in Machynlleth, Wales, producing aluminum dust used for brake linings in cars.

“I suppose I wanted to see if I could find a career for myself that wouldn’t be as Freddie Overlander’s son,” he said. “And I wanted to remain friends with him. Working in the same company is not always easy.”

In 1973 he “stumbled” into a job at Sucden, moving from metals to sugar, a business about which he knew nothing. Sucres et Denrees, the Paris-based sugar trader founded in 1952, had started its brokerage arm that year with six people. The unit now employs 170 and reported a 77 percent gain in profit to 9 million pounds ($14.5 million) last year, according to U.K. Companies House filings. Sucres et Denrees is having a 60th anniversary party during the LME week that starts Oct. 15.

Fidel Castro

Overlander’s first job at Sucden included changing the paper on the telex machine and recording trades on a clipboard. He still describes sugar as his “first love.”

His job included a three-year posting to the U.S. and regular trips to Cuba. He has a photo of himself with Fidel Castro in his office and once had a five-hour audience with the former Cuban leader and a few other people.

“He did most of the talking,” Overlander said about the meeting, which took place about six years ago. “Next to a couple of personal matters in my life, it was the most amazing evening that ever happened.”

Overlander got married shortly before he joined Sucden and the couple lives in Stanmore, northwest London. Their son works in crisis management and their daughter is a part-time project coordinator for Maccabi GB, which runs sports, education and social events for the Jewish community. Overlander says a lot of his free time is spent with his four grandchildren.

He grew up in the Temple Fortune neighborhood near the north London suburb of Golders Green. His grandfather was forced to leave Germany in 1939 because of his Jewish faith, ending up in London after the war. His grandmother was held in the Theresienstadt concentration camp in what is now the Czech Republic, reuniting with the family after the war.

Commodity Exchange

Overlander’s career placed him at the center of commodities markets, including stints as the chairman of the London Sugar Market and a director of the London Commodity Exchange, which merged with London International Financial Futures Exchange. Sucden was a founding member of Liffe (NYX), now Europe’s second- biggest derivatives market, and Overlander joined its board in 1996. He has been elected to the LME board four times.

“He’s one of the few remaining MDs that has actually traded and is still running a company,” said Nigel Dentoom, chairman of LN Metals International Ltd., who remembers first meeting Overlander at the LME 40 years ago. “He’s spent time on the LME floor, been a softs trader and served as a director on almost every main commodity market board and practitioner committee.”

The breadth of his roles reflects Sucden’s expansion from a single-commodity company to a business that now encompasses agriculture, metals, iron ore, freight, oil and coal and operates out of London, Hong Kong and Moscow. Overlander has been there throughout.

“He’s a trader through and through,” said Martin Abbott, the CEO of the LME. “He doesn’t hold back on what he’s thinking and he’s not afraid to challenge and to enjoy a good debate.”

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

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