Trading up in the world of oil

A CHANCE reunion of two childhood friends in 2016 sowed the seeds for an international business. Discovering that they shared a passion for trading, Borg Ang and Jason Tan decided to start a company together.

NW Corporation was thus incorporated, with Ang as chief executive officer and Tan as chief trading officer. From a modest start in proprietary trading of oil derivatives, it has since become a significant oil trading player.

Among its trading counterparts are oil majors such as BP, Shell and Chevron; national oil companies such as Thailand’s PTT and Saudi Aramco; and large independent traders.

Today, NW Corporation provides end-to-end commodities trading. This includes buyers’ funding before delivery, for swift and reliable transaction financing; settling contracts in local currency to minimise foreign exchange risk; and paying suppliers on delivery, for seamless trading.

While oil trading by the barrel remains its mainstay, it has expanded into metals, minerals and ore including coal, iron ore, bauxite, sand, aggregates and limestone.

A tricky business

The journey has not been plain sailing. In 2019, the company suffered a blow from two failed trades involving zinc-lead ore and river sand, having to pay for the losses out of its own coffers.

With two bad deals in a space of months, it was a trying time for the company – and the partnership between the two friends.

But Ang and Tan decided not to allow the misjudgement to derail the company. Instead, they sought to bolster NW corporation’s operations and risk management expertise by hiring senior industry veterans.

More recently, navigating the Covid-19 pandemic was challenging, especially in the early months when trade finance was severely hit by a lack of banking facilities.

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To overcome this sticky situation, the company sought to secure credit from suppliers and used alternative forms of payment security, instead of the traditional back-to-back letters of credit from banks.

With the rise of working from home, NW Corporation also took the chance to improve its internal processes with digitalisation, enabling operations to continue.

The company remained profitable, registering US$325 million in turnover and US$5.5 million in profit for the financial year ended April 2021.

Nor did the pandemic curtail its ambitions. In 2020, the company set up its first overseas subsidiary in Malaysia, followed by representative offices in Dubai and China in 2022. This was despite uncertainties thrown up by the Russia-Ukraine war and periodic lockdowns in China as the pandemic continued.

With increasing uncertainty and volatility in the oil market – leading to the demise of home-grown trading giants Zenrock Commodities and Hin Leong Trading, for instance – risk management is a priority for NW Corporation.

“At NW Corporation, we follow an effective and highly structured assessment formula that reduces the risk of significant financial losses through a combination of expertise, diligence, cutting-edge technologies and management processes,” said Ang.

Digital technology, for instance, helps to ensure compliance. Using a live ship tracking platform, NW Corporation can confirm that vessels engaged by the company have not been recently involved in prohibited cargo movements, or visited sanctioned countries.

The platform is helpful on the operational front too, as it provides location verification of vessels and details of the cargo carried.

Growing success

NW Corporation has pursued growth by both building external partnerships and developing in-house competencies.

One such strategic competency is dynamic planning, based on real-world variables. In this volatile industry, it is crucial to both prepare for the worst and capitalise on opportunities as they arise.

NW Corporation has thus developed capabilities in this area. It manages its risks by constantly monitoring the global economy and business environment, and conducts regular scenario planning so it can better respond to dynamic external variables.

The company is also burnishing its skills in other areas: building its brand, and incorporating environmental, social and governance concerns – which are growing increasingly important – into its business.

“The trading industry will always be there,” said business development director Francis Teng – and NW Corporation aims to be a key player. It hopes to eventually list on the Singapore Exchange and compete against trading houses in the top tier.

This series is part of the Enterprise 50 Educational Project between the E50 partners and the NUS Business School. NW Corporation was among the winners in 2021. The annual E50 ranking is co-organised by The Business Times and KPMG, sponsored by OCBC Bank, and supported by Enterprise Singapore, Singapore Exchange and Singapore Business Federation.