Gunvor Pulling Back From Metals Trading After Profits Slump

  • Top trader Rene Van Der Kam has left the firm, company says
  • All or most of warehousing business will be liquidated

Gunvor Group Ltd. is getting out of the metals-trading business and its top trader Rene Van Der Kam left the firm amid a global slump in commodity prices.

“Profitability was decreasing, while risk was increasing,” Seth Pietras, a Gunvor spokesman in Geneva, said by phone.

All or most of Gunvor’s warehousing will be liquidated and the metals management will depart, according to an internal memo obtained by Bloomberg News. A team will be created to unwind positions and execute existing contracts, the company said. Iron-ore and specialty-ore trading won’t be affected.

The pullback marks the latest in a string of high-profile shakeups at the world’s biggest trading firms. The metals industry was hit hard in 2015 by a collapse in prices and premiums amid slowing demand by top consumer China. On top of that, traders face paying more to store materials because of rising interest rates and the contango, a market structure where later-dated contracts are more expensive than earlier ones, has shrunk.

The internal memo cited “risk factors such as pricing and counterparty behavior” behind the decision to shutter the metals trading desk.

‘Strong Results’

Gunvor, founded in 2000 as an oil merchant, said its crude- and petroleum-product trading operations are performing well. The company’s Shanghai office will remain in operation as it expands oil and energy trading in China.

“We look forward to putting out strong results for 2015,” Pietras said.

While oil traders have generally thrived amid falling prices and high volatility, the metals business struggled to make money as Chinese demand weakened. The shrinking gap between Chinese and U.S. interest rates has made it less attractive to ship metal to China and changes to LME warehousing rules also hurt trader profits. 

Pietras confirmed Van Der Kam’s departure and the contents of the memo. Three other people from the metals desk will also leave the firm. Van Der Kam, who joined Gunvor from Noble Group Ltd. in 2014 and was based in Singapore, declined to comment when reached by telephone.

Other major departures in the metals industry include Simon Collins, who left his role as the head of metals and minerals at Trafigura Pte Ltd. last year. Noble Group Ltd. cut back on copper and zinc trading last year and Mark Hansen, the company’s former head of metals, left to set up Concord Resources Ltd.

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