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Commodities Fraud

​What people are talking about:

Saudi Aramco has expanded its presence in China by taking a 10% stake in Rongsheng Petrochemical and has announced a joint venture with 2 other Chinese companies to build a refinery and petrochemicals complex in Zhejiang province.

At the FT Commodities Summit in Lausanne, leaders from the metals and commodities space announced predictions of copper surging to a record high as a result of a rebound in China demand depleting low stockpiles.

The effect on commodities resulting from turmoil in the banking sector from SVB, Credit Suisse – UBS, etc is still waiting to be felt, CFOs from the larger commodity traders have said in Lausanne that appetite from the banks for their business might not wane yet have warned that it’s the smaller and mid-sized players who will most acutely be affected. We are already seeing some shops actively engage with trade finance and credit funds to seek alternative lines for trading.

Mercuria has announced a USD 500mn investment into a new nature-based solutions platform as they ramp up investments into the voluntary carbon offsets sector.

What we are currently working on:

  • Base Metals Traders, Singapore

  • North Asia (Japan / Korea) Structured Trade Finance Distribution, Singapore

  • Head of Metals Structured Finance and Investments, Singapore

  • Base Metals Analysts, Shanghai, and Singapore

  • Physical Metals Traders, Shanghai

  • South African Coal Book Manager, Global

  • Cross Commodities Portfolio Managers, Singapore, and Hong Kong

  • Grains / Feed / Pulses Trader, Singapore

  • Feed Ingredients Trader (including Sugar), Singapore

  • Regional Traders / Marketers (Grains / Feed / Oilseeds), Singapore

  • If you are interested in any of these roles, please reach out to us via the contact details at the end of this newsletter.

Alternatively, click here for more jobs.

Commodities Fraud

This month we have seen a number of frauds in the commodities; in particular base metals space which has had a knock-on effect regarding hiring and people moves in the sector. Some jobs seem to be at risk, and those companies looking to add talent now have a wider pool to consider. It is also a time when we have seen an increased demand for talent with strong control, operations, KYC, compliance, etc background to help mitigate these risks.

Authentic physical products, accurate documentary paperwork, and the good faith trade of such goods are intrinsically intertwined; all parts of which are essential linkages in the global movement and ownership of the underlying physical goods and at every stage are subject to certified handovers and checks. Documentary processes that ensure proper process, transfer, and payment for the delivery of such goods are strongly enshrined across the industry (e.g. Incoterms, UCP, ISBP)

The commodities business is a tangible and realistic global industry that runs on trust (handshakes and verbal deals) as much as distrust (documentary evidence and deep KYC investigations), mirroring the progress of humanity with a history almost as old as civilization itself. With this in mind, there is still a strong disconnect between the documentation-focused world of commodities trading and the physical reality of commodities trading. Fraud is unfortunately not an uncommon circumstance with the most recent scandal being the nickel fiasco and echoing back in time to 1750 BCE with one of the earliest written documents - a complaint about delivery of copper ingots of the wrong quality.

Over the years, many such scandals have been exposed: from tampering with bunker flowmeters to the presentation of copied B/Ls to multiple lenders. These form just a few of the scandals that have rocked the global commodities world over the past decade and which have led to millions if not billions in losses for investors.

As much as such international guidelines may exist and as detailed as they may be, they may ultimately be unable to stop a determined con man from manipulating the multiple points of potential failure inherent across both the physical and documentary systems. Perhaps the strongest use for such might still be the avoidance of liability and the ascription of where the greatest blame might lie, and thus who might ultimately be responsible for making restitution to the rest, encouraging all participants to police each other - still a challenging task in an industry where efficiency and cost are paramount.

Market Moves:

  • Jeffrey Wang will be joining Freepoint Commodities as Head of Asia, previously a Managing Director at Goldman Sachs.

  • Jerry Zhang Xuhao has joined Zijin Mining as a Metals Analyst, he was previously with Shanghai Metals Market.

  • Vivian Li Qi has joined Fomento as an Iron Ore Trader, previously with Cargill.

  • HuangChao Chen has joined Yongtai as General Manager, previously with Vale.

  • Tony Li has joined Standard Chartered Bank in a Commodity Sales role, previously with Macquarie.

  • Alan kar has joined Louis Dreyfus as Senior Trader, Sugar, previously with Golden Agri.

  • Circle Ji has joined Geely as Marketing Manager, previously with ASK Resources.

  • Jason Xiang has joined Trafigura as an Iron Ore Trader, previously at Unicore in Shanghai.

  • Naresh Navaratnarajah has joined Sims Metal Management as a Trader, previously with Stemcor.

  • Yicheng Hao has joined Shanshan Ningbo Group as a Copper Trader, previously with Citic.

  • Xinzhi Zhang has joined ITG as an Iron Ore Derivatives Trader, previously with Cargill.

  • Stephanie Shao has joined Citic Commodities as General Manager – Renewable Resource Department, formally Managing Director at Jiangxi Copper International.

Alex Kerr
Director | Partner

+65 3165 0710

EA 18S9493 | R1328009

John O.jpg
John Ong
Associate Director

+65 3165 0710

EA 18S9493 | R1658515