The fact that metals traders and the wider commodities industry have faced years of shrinking margins and are likely to face years more is likely no surprise to many of us. Declining margins are widely discussed at industry events and in the media, and a report last year from consultants Oliver Wyman estimated that margins could likely decline by at least another 15 percent over the next five years.[...]
In today’s highly competitive environment, metals traders are fighting against “the relentless erosion of profit margins”. To add to these systemic challenges, geopolitical risks such as trade wars, sanctions, tariffs and the ongoing impact of COVID-19 (Coronavirus), are increasing uncertainty, reducing demand for some materials, supply for others and creating longer-term logistics issues that will continue even if the virus is brought under control.[...]
In recent years, the metals CTRM debate has shifted away from “spreadsheet vs CTRM” as most organisations, even if they are not already using the technology, understand at least some of the benefits of efficient, process-automating commodity management technology.[...]
In concentrates trading (and indeed, trading for any commodity that includes quality premiums and discounts), managing assays and translating these into accounting and audit procedures are often some of the most difficult manual processes. Whilst this represents a challenge, it also means that these are the areas of opportunity where businesses could make some of the greatest operational improvements.[...]
In the fast-moving world of metals and concentrates trading, faster operations turn-around time translates into a higher stock turnover and ultimately greater profitability. Whilst many commodity businesses are investing in the technology to make marginal gains in each trade, operations processes are often hampered by inefficient, offline processes that require a lot of manual effort and repeated re-typing of information.[...]
A modern commodity management system not only helps ensure each trade is correct and the associated instructions are accurate. It also distributes data across the company so that everyone has real-time access to the latest information and knows when it’s time for their area of responsibility and expertise to step in.[...]
The art of commodity trading requires both skill and expertise to manage a wide range of exposures and then adapt to changing market conditions whilst employing an overall strategy for success. Position visibility is a crucial ingredient in this success. Each additional piece of information available to you in the moment provides additional optionality, and it is this optionality that allows you to innovate and succeed. At Gen10, we help you visualise positions like never before so that you can be creative and innovative in your trading.[...]
These interviews were recorded at ComRisk2019, where Gen10 and Barry Gould, CTO at Concord Resources, presented a case study session exploring how to ensure a successful CTRM implementation. The Gen10 team would like to thank the ComRisk organisers, Barry Gould, and Phil Culbert from KPMG for making this session happen.