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Singapore trader Kyen Resources buys Gunvor's metals book: sources
[MELBOURNE] Singapore-based metals trader Kyen Resources has bought the metals trading book of Switzerland's Gunvor, three sources with direct knowledge of the deal said, the latest small trader to expand even as the climate for trading metals gets tougher.
Kyen Resources, set up around two years ago, this week finalised the purchase of Gunvor's metals business - mostly term copper and zinc shipments - to add to its existing business that also includes aluminium, one of the sources said.
"The total book including zinc is about 65,000 tonnes, given we're halfway through the year," a source at the company told Reuters. "It just so happened as we decided to build a team, and we bumped into the Gunvor guys who were closing their book," said the source, who declined to be named because of the company's press policy. He declined to detail the purchase price.
Gunvor declined to comment.
Kyen, which is owned by Chinese company Shenzhen Feima International Supply Chain Co, focuses on physical commodity trading and plans to build out its business in China.
It joins a handful of small and mid-size firms expanding in glut-hit metals markets such as Zopco and Concord Resources, which have been founded by traders from large merchants like Mercuria and Noble.
The move comes as metals prices and premiums - charges paid for the physical movement of metals - have hit multi-year lows and as banks cut back on lending to smaller commodities players.
Despite the thin margins, a surfeit of metal means that many traders and consumers have opted to buy more on the spot market, opening up opportunities for new players, the trader said.
Swiss-based commodities trader Gunvor Group dismantled its Singapore-based metals business in February to focus on building up its more lucrative oil and gas activities, citing weak profitability and increased risk, including counterparty behaviour.