Singapore : Asia-focused Standard Chartered Bank Plc is looking to expand its commodities trading business into the physical energy markets, mainly for crude oil and coal, a senior executive said yesterday.
The bank has also increased its portfolio of products which it offers to clients in the past year, to include iron ore, freight, coal, palm oil and rubber, to capitalise on Asia's growth, said its Global Head of Commodities Trading, Arun Murthy.
Standard Chartered's expansion in the region's energy and commodities sector is in line with moves by banks such as France's Societe Generale, Australia's Macquarie and Australia and New Zealand Banking Group Ltd.
"We are looking to move into other physical markets, we will take it step by step, but we can't say for now when we will roll out. What makes sense for us to start with would be crude and coal," he told Reuters in an interview.
"For now, we have no intentions of owning warehouses or storage terminals but we are leasing for our physical base metals and precious metals business," added Murthy, who was promoted to global head of commodities trading based in Singapore, from his previous role as global head of energy trading last month.
The bank's main focus, as with others in the commodities business, is to provide hedging services to its clients, mainly end users and producers.
Citing examples, Murthy said 70 per cent of its trades in the oil markets were customer-driven while the remaining 30 per cent were the bank's proprietary volumes for its own risk-management purposes last year.
For 2010, the proportion is expected to be 80 per cent to 20 per cent because global crude benchmarks have been more volatile within a thinner range at $70-$85 a barrel, versus a gradually rising curve last year when prices range from $50 to $80, said Murthy.
Standard Chartered is also expanding its manpower. It recently hired the former managing director of Singapore-listed Chemoil, Karan Chabria, as its global head of oil products trading.
