Chinese independent trader Sinoying Singapore Pte Ltd has suspended its oil trading activities in the city-state due to a volatile market and will focus on its shipping and logistics business, its top official said.
"We will start trading again when the market improves and is not so volatile. It is simply too volatile at the moment," Managing Director Peter Gu said.
Gu said the company would focus on shipping and logistics as well as its domestic fuel oil distribution business in China's Guangdong province and Shanghai.
It has three tankers: the Acoaxet Lady, High Fidelity and Oil Ambassador.
"Oil trading has high risks but low returns, while shipping has low risks and high returns," Gu said.
The suspension of Sinoying's trading activities came in the wake of $550 million (Dh2.02 billion) of derivatives trading losses announced by China's jet fuel trader, China Aviation Oil Corp Ltd, in November.
Gu declined to comment on talk that his company had suffered losses in the oil products swaps market over the last six months.
Industry sources said Sinoying, which had been an active player in the physical fuel oil as well as in the middle distillate and fuel oil swaps markets, had laid off its four traders in Singapore.
Fuel oil prices for the 180-centistoke grade on the benchmark Singapore market have fluctuated in a wide range in the past six months, averaging $205 a tonne in October, falling to $175 in December and recovering to $220 in March. They hit a record high of almost $249 in early April.
A trader at Sinoying's Guangdong unit, Yuanxin, said its business was running normally with a team of 20.
Instead of sourcing oil from volatile international markets, Yuanxin would focus on securing barrels from other Chinese importers, the trader said.
Gu, a veteran trader who started with Hong Kong-based China Resources Co, has built Sinoying into one of China's 20 most active fuel oil importers, although its physical trading volume is much smaller than top players such as Gree.
