Turmoil in financial markets, slower growth in high-income countries, and rising inflation have all adversely affected growth prospects for developing countries over the near term. Most countries have shown impressive resilience in this turbulent environment, and growth for developing countries as a group is expected to moderate from 7.8% in 2007 to a still strong 6.5% in 2008. However, vulnerable countries that depend on foreign capital flows are likely to experience a sharper slowdown. Moreover, despite strong production growth at the aggregate level, higher food and energy prices have caused real incomes to decline, significantly increasing the hardships faced by the very poor, particularly in urban centers.
A recent article in the Wall Street Journal noted that if one were to examine the historical performance of the S&P 500, one would find that the stock market is trading at the same level at which it was doing so nine years ago. Commodities markets, on the other hand, have been in a bull trend. Some of the major drivers that have contributed in this stupendous growth of commodity markets globally are
- Increasing influence of Asian demand, particularly from rapidly industrializing China and India
- Increase in commodities prices in international markets as a result of demand growth, reinforced by tight supply capacities, tense geopolitical conditions (especially with respect to the oil market) and intense speculative activity
- With the rise in prices of crude oil, metals and minerals, commodity prices reached record historical levels in nominal terms in 2006, which increased by more than 30% between 2005 and 2006 (and by 80% from 2000 to 2006).
- Numerous developing countries rely on commodities for export revenues, and commodity production and trade provide employment for more than 2.5 billion people worldwide.
- The considerable rise in prices has had an impact on incomes of developing countries. It is estimated that extra revenues resulting from commodity exports were around 6.7 percentage points of GDP for oil-exporting countries and about 3 percentage points for countries exporting mining products.
- Increases in demand from developing countries stimulated by a particularly vigorous commodity consumption per unit of GDP compared to that of developed countries, faster economic growth, and increasing population
- "Globalization" of securities and commodities markets
- Baby boomers are in the middle of their peak savings years and have been one of the major causes of huge inflows of money into the stock market and into mutual funds.
- The increased use of food crops for production of bio-fuels is an important factor that led to large increases in the prices of vegetable oils and grains in 2007, which in turn contributed to an overall 15 percent increase in the index of agricultural prices and a 20 percent rise in food prices.
- The prices of metals have increased more than other commodity prices over the last four years, largely because of an especially strong demand in China.
- Shortages of equipment and skilled workers have significantly increased development costs, and ore grades are deteriorating.
The report on “Indian Commodities Trading Market” offers an in-depth analysis of the Global Commodities Trading Market vis-à-vis the Indian Commodities Trading Market. It discusses the overall structure of the Global Commodities Market as well as Indian Commodities Market from an insider perspective and provides a comprehensive study on macro and micro factors driving the growth of this market.
The report furnishes up-to-date facts and figures following meticulous observation with an aim to provide you with real insights into the commodity trading market as it stands today; the knowledge one needs to stand out and make informed decisions. The expanse of such insights into the past and present scenario percolates down to every known commodity currently traded. A conscious effort has been made to provide an overview of all there is to know and know of in the volatile market whilst a detailed product-wise and segment-wise is used in conjunction to expand. Taking into account that Price and Risk being the key drivers of the market, the report presents an exclusive section which maps price growth trend behaviour, factors triggering such behaviour, tracking relative performance of commodities , effects on the market players directly or indirectly using composite indexes from leading sources, the use of various hedging tools such as forwards and options and the relative performance in comparison, the implication and significance of the various regulatory bodies, commissions and statutory acts to highlight a few.
Table of Contents
Section I: Commodities Trading – An Overview
1. How Commodities Market Evolved – Historical Perspective
2. How Commodities Trading Market Works
2.1 Involved Parties
2.2 Types of Contracts
2.3 Participants in derivative contracts
2.4 Trading Techniques in Commodities Market
2.4.1 Ready Delivery Market
2.4.2 Specific Delivery Market
2.4.3 Futures Market
2.4.4 Auction Market
2.5 Requirement & Benefits of Commodity Derivatives
Section II: Commodities Market – An Analysis
1. Global Commodities Market – An Overview
1.1 Commodities Trading vis-à-vis Role of Investment Banks
1.1.1 Barclays Capital Commodities - Profile
1.1.2 BNP Paribas Commodity Futures – Profile
1.1.3 Citi Global Commodities – Profile
1.1.4 DB Commodity Services LLC - Profile
1.1.5 Goldman Sachs Commodities – Profile
1.1.6 J.P. Morgan’s Global Commodities Group – Profile
1.1.7 Merrill Lynch Global Commodities (MLCI) - Profile
1.1.8 UBS's Commodities Group
1.2 Energy Trading vis-à-vis Energy Trading In-house Divisions
1.2.1 RBS Sempra Commodities
1.2.2 Chevron’s Supply & Trading
1.2.3 LITASCO (LUKOIL International Trading and Supply Company)
1.2.4 Koch Supply & Trading
1.2.5 AEP Energy Services (Subsidiary of American Electric Power Company, Inc.)
1.2.6 Duke Energy Trading and Marketing (DETM)
1.2.7 Shell Trading (US) Company
1.2.8 Reliant Energy Securities & Commodities Trading Center
1.3 Commodity ETFs and ETNs
1.4 Commodity Trading vis-à-vis Sovereign Wealth Funds (SWFs)
1.4.1 History of SWFs
1.4.2 Driving Factors, Issues, Trends & Opportunities
1.4.3 Sources of Capital
1.4.4 How & where the money is invested – Market Size & Projections
1.4.5 Fund Rankings: Largest Funds by Assets under Management
2. Global Commodities Market Analysis
2.1 Global Commodities Market Size & Forecast
2.2 Commodity Market Profiles – Quick Points (Profile, Producers, Consumers, Largest Markets, Price Performance & Top Companies)
2.2.1 Aluminium Market
2.2.2 Cocoa Market
2.2.3 Coffee Market
2.2.4 Copper Market
2.2.5 Cotton Market
2.2.6 Gold Market
2.2.7 Nickel Market
2.3 Global Commodities Indexes – Performance Analysis
2.3.1 Dow Jones - AIG Commodity Indices
2.3.2 Merrill Lynch Commodity index eXtra (MLCX)
2.3.3 S&P GSCI™ Composite Index
2.3.4 Reuters/Jefferies-CRB® Indices
3. Issues, Trends & Opportunities
3.1 Impact of higher commodity prices
3.2 Movement of oil prices
3.3 Performance of agriculture commodities
3.4 Companies turn to top derivatives dealers for help in hedging
3.5 Carbon to be the biggest global commodity market by 2012
3.6 Renewed interest from investors
3.7 More sophisticated tools & platforms
3.8 Investment banks are major players
3.9 ETFs, changing the equation of Commodities Investment
3.10 China – Major Demand Driver of Global Commodities
3.11 Macro-Economic Driving Factors
3.12 Factors affecting pricing of base metals
3.12.1 Lead (75% y-o-y growth)
3.12.2 Tin (66% y-o-y growth)
3.12.3 Zinc (40% y-o-y decline)
3.12.4 Nickel (4% y-o-y decline)
Section III: Indian Commodities Trading Market
1. Indian Commodities Market – An Overview
2. Indian Commodities Market Size – An Analysis
2.1 MCX vs. SENSEX – A Comparative Analysis
3. Indian Commodities Market – Performance Analysis
3.1 Aluminium Market – Future Contract Value (Jan 07 – Jul 08)
3.2 Coffee Market – Robusta Futures Contract Value (Jan 07 – Aug 08)
3.3 Copper Market – Copper Futures Contract Value (Jan 07 – Jul 08)
3.5 Crude Oil Market – Crude Oil Futures Contract Value (Jan 07 - Aug 08)
3.6 Gold Market – Futures Contract Value (Jan 07 – Aug 08)
3.7 Chana (Chickpea) Market – Futures Contract Value (Jan 07 – May 08)
3.8 Nickel Market – Futures Contract Value (Jan 07 – Jul 08)
3.9 Zinc Market – Futures Contract Value (Jan 07 – Jul 08)
3.10 Lead Market – Price Performance (Jan 07 – Aug 08)
3.11 Cardamom Market – Futures Contract Value (Jan 07 – Jul 08)
3.12 Jeera (Cumin Seed) Market – Futures Contract Value (Jan 07 – Jul 08)
3.13 Lead Market – Futures Contract Value (Jan 07 – Jul 08)
3.14 Mentha Oil Market – Futures Contract Value (Jan 07 – Jul 08)
3.15 Natural Gas Market – Futures Contract Value (Jan 07 – Jul 08)
4. Government Regulations, Initiatives and Reforms
4.1 Setting up a Committee on Role of Futures Trading in 1993
4.2 Setting up of Forward Market Commission in 1953
4.3 Forward Contracts (Regulation) Act, 1952
4.4 Forward Contracts (Regulation) Amendment Bill, 2006
4.5 Forward Contracts (Regulation) Amendment Ordinance, 2008
4.6 Commodities Trading Tax
4.7 Import duty cut & export duty hike in Metals industry
5. Issues, Trends & Opportunities
5.1 Commodity Trends: Hurt by economic slowdown
5.2 Multi Commodity Exchange (MCX) launched currency futures trading
5.2 Hedging ban a slow political process to kill futures market
5.3 Commodity investment goes retail
5.4 Unresolved Issues and Future Prospects
5.5 Scrap now being considered a waste commodity
5.6 Commodity and Equity Markets have been moving in tandem
5.7 Indian Bt Cotton to hit market soon
5.8 Warehousing to take giant leap in India
List of Charts
Chart 1: Mode of Financing in Commodities Trading
Chart 2: Business Operations Model of a Trading Process in a Commodity Exchange
Chart 3: SWFs Market Projections (2007-2012)
Chart 4: Comparison of AUM of SWFs and Asset Managers, Private Equity and Hedge Funds ($ billions)
Chart 5: Sovereign Wealth Fund Deal Volume (1997-2007)
Chart 6: Sector-wise growth: Exchange trade of commodity derivatives by volume (03-06)
Chart 7: World’s leading Commodity Exchanges in developing countries – 2006 Contracts ($millions)
Chart 8: Major base metal commodity exchanges & emerging markets
Chart 9: Base Metal Price Trend – 2006 vs. Present Price
Chart 10: Cocoa Monthly Averages of Daily Prices (Oct 07- Oct 08)
Chart 11: ICO Indicator Prices - Annual & Monthly Averages (1998 to 2008)
Chart 12: Global Cotton Average Price Trend ("A" Index (cents/pound)) – 1988 -2008
Chart 13: Merrill Lynch Commodity index eXtra (MLCX) - Commodity Weightings
Chart 14: MLCX Weights as of January 2008
Chart 15: MLCXTR outperformance vs. SPGCCITR & DJAIGTR
Chart 16: Reuters/Jefferies CRB® Total Return Index: Jan 82 – Sep 08 (monthly close)
Chart 17: Forecast of China's Share of the Growth in Demand for Global Commodities- 2009
Chart 18: Types of Commodities Traded in India
Chart 19: MCX vs. SENSEX – Comparative Analysis (Jan 06-Sep 08)
Chart 20: India's Aluminium Futures Contract in Value (Rs. Crore) (Jan 07 – Jul 08)
Chart 21: India's Coffee Robusta Futures Contract in Value (Rs. Lakhs) (Jan 07 – Aug 08)
Chart 22: India's Copper Futures Contract in Value (Rs. Crore)
Chart 23: India's Crude Oil Futures Contract in Value (Rs. Crore)
Chart 24: India's Gold (1Kg) Futures Contract in Value (Rs. Crore)
Chart 25: India's Gold (100g) Futures contract in Value (Rs. Crore)
Chart 26: India's Chana (Chickpea) Futures Contract in Value (Rs. Crore)
Chart 27: India's Nickel Futures Contract in Value (Rs. Crore)
Chart 28: India's Zinc Futures Contract in Value (Rs. Crore)
Chart 29: India's Lead Futures Contract in Value (Rs. Crore)
Chart 30: India's Cardamom Futures Contract in Value (Rs. Crore)
Chart 31: India's Jeera (Cumin Seed) Futures Contract in Value (Rs. Lakhs)
Chart 32: India's Lead Futures Contract in Value (Rs. Crore)
Chart 33: India's Mentha Oil Futures Contract in Value (Rs. Crore)
Chart 34: India's Natural Gas Futures Contract in Value (Rs. Crore)
List of Tables
Table 1: The Global Economic Outlook (2006-2010)
Table 2: Major Global Commodity Exchanges
Table 3: Major Asian Commodity Exchanges
Table 4: Major European Commodity Exchanges
Table 5: Commodity Traders – List of top banks, Financial Institutions & other top companies
Table 6: Fund Rankings: Largest Funds by Assets under Management
Table 7: Global Commodity Prices – Monthly & Yearly Averages (Jan 06 - Sep 08)
Table 8: Commodity Forecast Nominal Prices (2007-2020)
Table 9: World Cocoa Market Estimates (in million metric tons) – 2002-2008
Table 10: ICO Indicator Prices - Annual & Monthly Averages (1998 to 2008)
Table 11: Global Cotton Average Price Trend ("A" Index (cents/pound)) – 1988 -2008
Table 12: Comparison of Commodity Indexes
Table 13: Dow Jones AIG Total Return Performance %
Table 14: Dow Jones AIG Excess Return Performance %
Table 15: Dow Jones AIG Yearly Returns (1990-2008)
Table 16: DJGI AIG Commodity Index - Commodity Weightings
Table 17: Merrill Lynch Commodity index eXtra (MLCX) - Commodity Weightings
Table 18: S&P GSCI™ Components and Dollar Weights (%)
Table 19: S&P GSCI™ Index Values
Table 20: Commodity Exchanges in India
Table 21: Trend of Commodities in National Commodity & Derivatives Exchange (Oct 08)
Table 22: Trend of Commodities in Multi Commodity Exchange of India (Oct 08)
Table 23: Trend of Metals in Multi Commodity Exchange of India (MCX) and National Commodity & Derivatives Exchange (NCDEX) (Oct 08)
Table 24: Trend of Oil Commodities traded in NYMEX (Oct 08)
Table 25: Trend of Metal commodities traded in NYMEX (Oct 08)
Pages: 186
Showing posts with label Commodity Trading. Show all posts
Showing posts with label Commodity Trading. Show all posts
Thursday, November 13, 2008
Sunday, July 6, 2008
Commodity market to reach $1.73 trillion by 2010: Assocham
The Indian commodity market is expected to grow by 30 percent and will reach Rs.74,156 billion ($1.73 trillion) in volume by 2010, according to a study by the Associated Chambers of Commerce and Industry of India (Assocham). Assocham found that the Indian commodity market expanded 50 times in a span of five years from Rs.665.3 billion in 2002 to Rs.33,753 billion in 2007 as people's participation in such trade continued to grow. "The growth in commodities derivatives trading would now grow by about 30 percent to reach a projected level of Rs.74,156 billion in the next two years," said Assocham president Sajjan Jindal.
The turnover in proportion to GDP of commodity trade increased from 4.7 percent in 2004 to 20 percent in 2007 and is expected to go up many-fold since commodity markets would remain friendly to subscribers. "The daily average volume of trade in commodities exchanges by December 2007 was over Rs.120 billion," said Jindal.
"Gold, silver and crude recorded the highest turnover in Multi Commodity Exchange (MCX) while in National Commodity & Derivatives Exchange Ltd (NCDEX), soya oil, guar seed and soyabean and in NMCE pepper, rubber and raw jute were the most actively traded commodities on an average. This trend is likely to continue," he added. The study points out that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains.
It also noted that Indian commodity exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth. "Some of the major problems associated with commodity markets in India include infrastructure, trading system, broking community, controlled market, integration of regional and national exchanges and integration of spot and futures markets," the study said.
To attract active traders to commodity futures, the regulatory authority needs to introduce a more stringent code of conduct in setting standards for brokers, imposing capital adequacy norms and defining qualification criteria, it noted.
For a vibrant futures market, it is imperative that commodity pricing be left to market forces, without monopolistic government control. However, in India, scores of commodities in which futures trading is permitted are still protected under the Essential Commodity Act, 1955. The integration of the spot and futures market is another critical factor for the expansion of the commodity futures market in India. The state governments largely control the spot market in commodities, the study said. The institutional and policy-level issues associated with commodity exchanges have to be addressed by the government in coordination with the Forward Markets Commission in order to take necessary measures to pave the way for a significant expansion and further development of the commodity futures markets, Assocham stressed.
Sources: ASSOCHAM, Silicon India and PTI
The turnover in proportion to GDP of commodity trade increased from 4.7 percent in 2004 to 20 percent in 2007 and is expected to go up many-fold since commodity markets would remain friendly to subscribers. "The daily average volume of trade in commodities exchanges by December 2007 was over Rs.120 billion," said Jindal.
"Gold, silver and crude recorded the highest turnover in Multi Commodity Exchange (MCX) while in National Commodity & Derivatives Exchange Ltd (NCDEX), soya oil, guar seed and soyabean and in NMCE pepper, rubber and raw jute were the most actively traded commodities on an average. This trend is likely to continue," he added. The study points out that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains.
It also noted that Indian commodity exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth. "Some of the major problems associated with commodity markets in India include infrastructure, trading system, broking community, controlled market, integration of regional and national exchanges and integration of spot and futures markets," the study said.
To attract active traders to commodity futures, the regulatory authority needs to introduce a more stringent code of conduct in setting standards for brokers, imposing capital adequacy norms and defining qualification criteria, it noted.
For a vibrant futures market, it is imperative that commodity pricing be left to market forces, without monopolistic government control. However, in India, scores of commodities in which futures trading is permitted are still protected under the Essential Commodity Act, 1955. The integration of the spot and futures market is another critical factor for the expansion of the commodity futures market in India. The state governments largely control the spot market in commodities, the study said. The institutional and policy-level issues associated with commodity exchanges have to be addressed by the government in coordination with the Forward Markets Commission in order to take necessary measures to pave the way for a significant expansion and further development of the commodity futures markets, Assocham stressed.
Sources: ASSOCHAM, Silicon India and PTI
Thursday, April 26, 2007
US Energy Trading Market
Market Size & Forecast
According to a report titled "U.S. Energy Trading," by technology consulting firm Celent
=> The U.S. energy trading market shrank from $1.8 trillion in 2001 to $1.3 trillion in 2002, but will approach $1.7 trillion in 2008 as banks and hedge funds pick up where failed energy merchants left off.
=> Energy trading grew at an extraordinary rate in the late 1990s, only to decrease dramatically in late 2001 and 2002 as Enron Corp. and other failed energy merchant firms collapsed.
=> About 17 percent of the energy trading market is traded electronically, with short-term natural gas contracts being the most heavily traded via this medium.
=> Celent estimates that electronic trading will account for 29 percent of the market by 2008.
=> As the U.S. energy trading market matures, the report found, banks and hedge funds should help drive solid, steady growth as market participants become increasingly comfortable using risk management tools.
According to Energy Insights, an IDC company
=> Energy trading in liquid hydrocarbons will continue to be robust, buoyed by high prices and increased volatility.
=> Trading in electricity and natural gas will recover from the post-Enron slump.
=> Altogether, Energy Insights forecasts the market to grow by 30% during 2002-2006, with oil and gas majors and financial service firms dominating the trading markets, but with asset-based traders - particularly in power - reengaging.
=> Further on the horizon, increased participation of financial institutions in energy commodity trading will bring program trading in 2008 to 2010.
Trends & Issues
Renewed interest from investors
The industry that Enron made infamous - energy trading - is springing to life again. Volatile energy markets and record-high commodity prices are prompting renewed interest from investors eager to play in the sector. That has pushed banks and a growing number of hedge funds to hire more energy traders and brainy quantitative minds to back their bets on energy prices. In Houston, New York and London, a scramble for top trading talent has ensued that rivals the cutthroat hiring frenzy of the late 1990's. "The whole market is hot right now," said Justin Pearson, managing director of Human Capital, a search firm based in London for energy traders. "Everybody is talking about expansion."
More sophisticated tools & platforms
Industry participants are now paying far more attention to counterparty credit risk, using clearing mechanisms such as the Intercontinental Exchange and the New York Mercantile Exchanges ClearPort platform. Price transparency has improved and banks and hedge funds have become increasingly prominent, providing desperately needed liquidity.
Banks playing an important role
With that revival come questions from some financial market analysts about whether energy trading will be better able to withstand another potential meltdown. While banks have stepped in with their superior balance sheets, credit ratings and trading skills to fill the liquidity void left by Enron, the latest ramp-up in trading has also been marked by an air of secrecy underscored by the proliferation of hundreds of hedge funds that are speculating on everything from crude oil to electricity in both regulated and unregulated markets. Many funds are being aided by investments from banks, which are also buying up distressed power plants and other remnants of the collapsed sector.
Investment banks are major players
Wall Street banks are notoriously fickle about their commitment to commodities trading. Two dominant players among banks, Morgan Stanley and Goldman Sachs, for example, participate in both the physical and financial energy markets and provide risk management products for clients and their own accounts. A number of other banks have also recently opened energy trading desks. Hedge funds and other speculators, meanwhile, have been drawn into the financial markets by the recent rise in crude oil, gasoline and diesel prices, as well as the long-term trend toward higher and more volatile prices for crude oil and petroleum products, among other commodities. In 2004, Goldman and Morgan Stanley earned about $2.6 billion combined from commodities trading, most of that from energy, according to Sanford C. Bernstein & Company in New York.
Top Companies with In-house Energy Trading Divisions
Sempra Energy Trading ® Corp. (SET) Wholly owned subsidiary of Sempra Energy)
Sempra Energy Trading ® Corp. (SET) is a full-service energy trading company - one of the largest in North America. It markets and trades physical and financial energy products: crude oil and refined products, natural gas and natural gas liquids, power, coal, emissions and ethanol. Sempra Energy Trading ® has more than 1200 customers worldwide. Our customer base includes most of the major oil, gas and power companies in North America, Europe, Asia and South America. Its high-volume financial transactions can involve over 100 billion cubic feet (bcf) of natural gas daily. That translates to approximately one half of all the natural gas consumed daily in the U.S. and Canada. SET is a wholly owned subsidiary of Sempra Energy, a Fortune 500 energy services holding company based in San Diego, California.
Chevron’s Supply & Trading
Supply & Trading manages Chevron's global supply chain, supplying crude oil and refined products to the company's global refining and marketing network. In addition, Supply & Trading markets aviation fuels, marine fuels and marine lubricants.
Supply & Trading plays a critical role around the globe, optimizing system assets, trading and marketing crude oil and refined products, and managing associated risk across the global supply chain.
Headquartered in Houston, it has regional hubs in London, Singapore and Cape Town. Crude and Products Supply & Trading conducts business in nearly 70 countries and trades more than 200 different grades of crude oil and petroleum products.
LITASCO (LUKOIL International Trading and Supply Company)
LITASCO (LUKOIL International Trading and Supply Company) is the international arm of LUKOIL for marketing, supply and trading. It is composed of various companies that are coordinated by and report to LITASCO Geneva, the Group's parent company. The LITASCO Group is made up of subsidiaries and branches in the United States, Netherlands, Sweden, Germany, Middle East,and Singapore. In total, the LITASCO Group is present in thirteen different countries.
LITASCO is one of the world's major traders of crude oil and refined petroleum products. The company's purchases and sales include spot, term, exchange and other arrangements such as swaps, and cover a wide range of locations and counterparts in order to optimize revenues while ensuring security of supply, flexibility and cost competitiveness. LITASCO deals with more than two thousand suppliers and customers, including all of world's major oil corporations.
The activities of the LITASCO Group are split into four main areas:
# Marketing and distribution of LUKOIL crude and petroleum products internationally.
# Supply and logistical optimization of crude oil to LUKOIL refineries located outside of Russia, and of petroleum products to the LUKOIL retail network in Eastern Europe, the Caucasus, and Baltic States.
# Entrepreneurial third party of crude oil and refined products from a global network of trading offices.
# International business development and coordination.
Koch Supply & Trading
Koch companies have interests in and access to major international trading regions in the United states, Europe, Asia and the Middle East. Koch Supply & Trading companies offer customers innovative risk management tools and help businesses worldwide manage margins, cash flow, grade spread and inventory, as well as provide supply, trading, technical and operating services.
Products traded by Koch Supply & Trading companies include:
# Petroleum & chemicals: crude oil, petrochemicals such as benzene, toluene, mixed xylenes, paraxylenes and styrene; diesel, jet and residual fuels, and intermediate feedstocks such as naphtha, vacuum gasoil and straight run fuel oil.
# Risk management products: structured risk management products such as derivatives, cross-commodity and other hedging products.
# Natural gas & gas liquids: natural gasoline, butane, ethane, propane, olefins such as ethylene and propylene, and plastics.
Active on a number of international exchanges such as NYMEX , LME, IPE, SPCEX, NYBOT, CBOT, CME, EUREX, LIFFE
AEP Energy Services (Subsidiary of American Electric Power Company, Inc.)
AEP Energy Services, Inc. is a national energy company engaged in the marketing and trading of energy commodities and related services. Specifically, the company analyzes and projects current and future market clearing prices for various energy commodities; trades energy commodities and associated financial instruments in both regional and national energy markets; and, markets energy supplies and related services to both the wholesale and large industrial segments of the energy market. AEP Energy Services, Inc. is a wholly owned subsidiary of American Electric Power (AEP), one of the nation’s largest investor owned utilities.
Duke Energy Trading and Marketing (DETM)
Duke Energy Trading and Marketing (DETM) is a joint venture in which Duke Energy Corporation has a 60 percent interest. DETM markets natural gas, electricity and other energy-related products to a wide range of customers.
Southern Company Energy Marketing (a unit of Southern Company)
Southern Company Energy Marketing is jointly owned by Southern Energy Inc. and Vastar Resources Inc. Southern Company Energy Marketing provides energy marketing, risk management and financial services and other energy-related commodities, products and services to customers in North America. Southern Energy’s parent company, Southern Company (NYSE: SO), is one of the largest producer of electricity in the United States.
Shell Trading (US) Company
Shell Trading (US) Company is a corporation that acts as the single market interface for Royal Dutch Shell companies and affiliates in the United States. It became operational in August 1998 and has offices in Houston, TX (headquarters); Dallas, TX; Denver, CO; Midland, TX; and San Antonio, TX; and has an affiliated Shell Trading company in Calgary, Alberta. Shell Trading Highlights:
# Buys and sells more than five million barrels per day of hydrocarbons
# One of the largest physical traders of hydrocarbons in the United States
# One of the world's largest energy trading company
Its portfolio includes the buying and selling of physical crude oil, finished products, and feedstocks, as well as trading various paper products, both on exchanges (The New York Mercantile Exchange and The Chicago Mercantile Exchange) as well as over the counter. Through its operations, Shell Trading (US) Company buys and sells more than five million barrels of hydrocarbons per day in physical markets, making it one of the largest petroleum supply organizations in the United States and the world. Specific businesses include acquisition, sales and trades of domestic crude oil and products; lease crude oil acquisition and marketing; marine chartering; and risk management services.
Reliant Energy Securities & Commodities Trading Center
The company has a wholesale energy trading and marketing business that ranks among the top five in the U.S. in combined electricity and natural gas volumes and has a presence in most of the major power regions of the U.S. It also has power generation and wholesale trading and marketing operations in Western Europe. The Reliant Energy Trading Center is located on the first floor of the Jerry and Kay Cox Graduate Business Center. The facility seats up to 40 students at computer workstations. It is outfitted with two Bloomberg terminals, four independent LED projectors, a SMART Technology system and two drop-down screens. The center also features the Kiodex Risk Workbench, a state-of-the-art trading and risk management platform.
Some other major players that operate in energy & commodities trading on various exchanges are:
• El Paso Energy
• Totalfina Elf
• Continental Power Exchange
• Calpine Corporation
• Exelon Corporation
• Dominion Resources, Inc.
• Southern Company
• Constellation Energy Group, Inc.
• Mirant Corporation
Top Companies from Financial Services Sector
• Deutsche Bank AG
• Goldman Sachs
• Morgan Stanley Dean Witter
• SG Investment Banking
• Bank of America
• American International Group
List of Exchanges for Global Commodity Trading
• Chicago Board of Trade
• Chicago Mercantile Exchange
• Euronext.liffe
• Kansas City Board of Trade
• London Metal Exchange
• Minneapolis Grain Exchange
• New York Mercantile Exchange
• New York Board of Trade
• Winnipeg Commodity Exchange
For a list of other commodity exchanges, please click on the following link:
http://en.wikipedia.org/wiki/Commodities_exchange
List of online Commodity Exchanges
IntercontinentalExchange, Inc. (NYSE: ICE)
Web: https://www.theice.com
APX Inc.
Web: http://www.apx.com
Enporion, Inc.
Web: http://www.enporion.com
Petroleum Place, Inc.
Web: http://www.petroleumplace.com
According to a report titled "U.S. Energy Trading," by technology consulting firm Celent
=> The U.S. energy trading market shrank from $1.8 trillion in 2001 to $1.3 trillion in 2002, but will approach $1.7 trillion in 2008 as banks and hedge funds pick up where failed energy merchants left off.
=> Energy trading grew at an extraordinary rate in the late 1990s, only to decrease dramatically in late 2001 and 2002 as Enron Corp. and other failed energy merchant firms collapsed.
=> About 17 percent of the energy trading market is traded electronically, with short-term natural gas contracts being the most heavily traded via this medium.
=> Celent estimates that electronic trading will account for 29 percent of the market by 2008.
=> As the U.S. energy trading market matures, the report found, banks and hedge funds should help drive solid, steady growth as market participants become increasingly comfortable using risk management tools.
According to Energy Insights, an IDC company
=> Energy trading in liquid hydrocarbons will continue to be robust, buoyed by high prices and increased volatility.
=> Trading in electricity and natural gas will recover from the post-Enron slump.
=> Altogether, Energy Insights forecasts the market to grow by 30% during 2002-2006, with oil and gas majors and financial service firms dominating the trading markets, but with asset-based traders - particularly in power - reengaging.
=> Further on the horizon, increased participation of financial institutions in energy commodity trading will bring program trading in 2008 to 2010.
Trends & Issues
Renewed interest from investors
The industry that Enron made infamous - energy trading - is springing to life again. Volatile energy markets and record-high commodity prices are prompting renewed interest from investors eager to play in the sector. That has pushed banks and a growing number of hedge funds to hire more energy traders and brainy quantitative minds to back their bets on energy prices. In Houston, New York and London, a scramble for top trading talent has ensued that rivals the cutthroat hiring frenzy of the late 1990's. "The whole market is hot right now," said Justin Pearson, managing director of Human Capital, a search firm based in London for energy traders. "Everybody is talking about expansion."
More sophisticated tools & platforms
Industry participants are now paying far more attention to counterparty credit risk, using clearing mechanisms such as the Intercontinental Exchange and the New York Mercantile Exchanges ClearPort platform. Price transparency has improved and banks and hedge funds have become increasingly prominent, providing desperately needed liquidity.
Banks playing an important role
With that revival come questions from some financial market analysts about whether energy trading will be better able to withstand another potential meltdown. While banks have stepped in with their superior balance sheets, credit ratings and trading skills to fill the liquidity void left by Enron, the latest ramp-up in trading has also been marked by an air of secrecy underscored by the proliferation of hundreds of hedge funds that are speculating on everything from crude oil to electricity in both regulated and unregulated markets. Many funds are being aided by investments from banks, which are also buying up distressed power plants and other remnants of the collapsed sector.
Investment banks are major players
Wall Street banks are notoriously fickle about their commitment to commodities trading. Two dominant players among banks, Morgan Stanley and Goldman Sachs, for example, participate in both the physical and financial energy markets and provide risk management products for clients and their own accounts. A number of other banks have also recently opened energy trading desks. Hedge funds and other speculators, meanwhile, have been drawn into the financial markets by the recent rise in crude oil, gasoline and diesel prices, as well as the long-term trend toward higher and more volatile prices for crude oil and petroleum products, among other commodities. In 2004, Goldman and Morgan Stanley earned about $2.6 billion combined from commodities trading, most of that from energy, according to Sanford C. Bernstein & Company in New York.
Top Companies with In-house Energy Trading Divisions
Sempra Energy Trading ® Corp. (SET) Wholly owned subsidiary of Sempra Energy)
Sempra Energy Trading ® Corp. (SET) is a full-service energy trading company - one of the largest in North America. It markets and trades physical and financial energy products: crude oil and refined products, natural gas and natural gas liquids, power, coal, emissions and ethanol. Sempra Energy Trading ® has more than 1200 customers worldwide. Our customer base includes most of the major oil, gas and power companies in North America, Europe, Asia and South America. Its high-volume financial transactions can involve over 100 billion cubic feet (bcf) of natural gas daily. That translates to approximately one half of all the natural gas consumed daily in the U.S. and Canada. SET is a wholly owned subsidiary of Sempra Energy, a Fortune 500 energy services holding company based in San Diego, California.
Chevron’s Supply & Trading
Supply & Trading manages Chevron's global supply chain, supplying crude oil and refined products to the company's global refining and marketing network. In addition, Supply & Trading markets aviation fuels, marine fuels and marine lubricants.
Supply & Trading plays a critical role around the globe, optimizing system assets, trading and marketing crude oil and refined products, and managing associated risk across the global supply chain.
Headquartered in Houston, it has regional hubs in London, Singapore and Cape Town. Crude and Products Supply & Trading conducts business in nearly 70 countries and trades more than 200 different grades of crude oil and petroleum products.
LITASCO (LUKOIL International Trading and Supply Company)
LITASCO (LUKOIL International Trading and Supply Company) is the international arm of LUKOIL for marketing, supply and trading. It is composed of various companies that are coordinated by and report to LITASCO Geneva, the Group's parent company. The LITASCO Group is made up of subsidiaries and branches in the United States, Netherlands, Sweden, Germany, Middle East,and Singapore. In total, the LITASCO Group is present in thirteen different countries.
LITASCO is one of the world's major traders of crude oil and refined petroleum products. The company's purchases and sales include spot, term, exchange and other arrangements such as swaps, and cover a wide range of locations and counterparts in order to optimize revenues while ensuring security of supply, flexibility and cost competitiveness. LITASCO deals with more than two thousand suppliers and customers, including all of world's major oil corporations.
The activities of the LITASCO Group are split into four main areas:
# Marketing and distribution of LUKOIL crude and petroleum products internationally.
# Supply and logistical optimization of crude oil to LUKOIL refineries located outside of Russia, and of petroleum products to the LUKOIL retail network in Eastern Europe, the Caucasus, and Baltic States.
# Entrepreneurial third party of crude oil and refined products from a global network of trading offices.
# International business development and coordination.
Koch Supply & Trading
Koch companies have interests in and access to major international trading regions in the United states, Europe, Asia and the Middle East. Koch Supply & Trading companies offer customers innovative risk management tools and help businesses worldwide manage margins, cash flow, grade spread and inventory, as well as provide supply, trading, technical and operating services.
Products traded by Koch Supply & Trading companies include:
# Petroleum & chemicals: crude oil, petrochemicals such as benzene, toluene, mixed xylenes, paraxylenes and styrene; diesel, jet and residual fuels, and intermediate feedstocks such as naphtha, vacuum gasoil and straight run fuel oil.
# Risk management products: structured risk management products such as derivatives, cross-commodity and other hedging products.
# Natural gas & gas liquids: natural gasoline, butane, ethane, propane, olefins such as ethylene and propylene, and plastics.
Active on a number of international exchanges such as NYMEX , LME, IPE, SPCEX, NYBOT, CBOT, CME, EUREX, LIFFE
AEP Energy Services (Subsidiary of American Electric Power Company, Inc.)
AEP Energy Services, Inc. is a national energy company engaged in the marketing and trading of energy commodities and related services. Specifically, the company analyzes and projects current and future market clearing prices for various energy commodities; trades energy commodities and associated financial instruments in both regional and national energy markets; and, markets energy supplies and related services to both the wholesale and large industrial segments of the energy market. AEP Energy Services, Inc. is a wholly owned subsidiary of American Electric Power (AEP), one of the nation’s largest investor owned utilities.
Duke Energy Trading and Marketing (DETM)
Duke Energy Trading and Marketing (DETM) is a joint venture in which Duke Energy Corporation has a 60 percent interest. DETM markets natural gas, electricity and other energy-related products to a wide range of customers.
Southern Company Energy Marketing (a unit of Southern Company)
Southern Company Energy Marketing is jointly owned by Southern Energy Inc. and Vastar Resources Inc. Southern Company Energy Marketing provides energy marketing, risk management and financial services and other energy-related commodities, products and services to customers in North America. Southern Energy’s parent company, Southern Company (NYSE: SO), is one of the largest producer of electricity in the United States.
Shell Trading (US) Company
Shell Trading (US) Company is a corporation that acts as the single market interface for Royal Dutch Shell companies and affiliates in the United States. It became operational in August 1998 and has offices in Houston, TX (headquarters); Dallas, TX; Denver, CO; Midland, TX; and San Antonio, TX; and has an affiliated Shell Trading company in Calgary, Alberta. Shell Trading Highlights:
# Buys and sells more than five million barrels per day of hydrocarbons
# One of the largest physical traders of hydrocarbons in the United States
# One of the world's largest energy trading company
Its portfolio includes the buying and selling of physical crude oil, finished products, and feedstocks, as well as trading various paper products, both on exchanges (The New York Mercantile Exchange and The Chicago Mercantile Exchange) as well as over the counter. Through its operations, Shell Trading (US) Company buys and sells more than five million barrels of hydrocarbons per day in physical markets, making it one of the largest petroleum supply organizations in the United States and the world. Specific businesses include acquisition, sales and trades of domestic crude oil and products; lease crude oil acquisition and marketing; marine chartering; and risk management services.
Reliant Energy Securities & Commodities Trading Center
The company has a wholesale energy trading and marketing business that ranks among the top five in the U.S. in combined electricity and natural gas volumes and has a presence in most of the major power regions of the U.S. It also has power generation and wholesale trading and marketing operations in Western Europe. The Reliant Energy Trading Center is located on the first floor of the Jerry and Kay Cox Graduate Business Center. The facility seats up to 40 students at computer workstations. It is outfitted with two Bloomberg terminals, four independent LED projectors, a SMART Technology system and two drop-down screens. The center also features the Kiodex Risk Workbench, a state-of-the-art trading and risk management platform.
Some other major players that operate in energy & commodities trading on various exchanges are:
• El Paso Energy
• Totalfina Elf
• Continental Power Exchange
• Calpine Corporation
• Exelon Corporation
• Dominion Resources, Inc.
• Southern Company
• Constellation Energy Group, Inc.
• Mirant Corporation
Top Companies from Financial Services Sector
• Deutsche Bank AG
• Goldman Sachs
• Morgan Stanley Dean Witter
• SG Investment Banking
• Bank of America
• American International Group
List of Exchanges for Global Commodity Trading
• Chicago Board of Trade
• Chicago Mercantile Exchange
• Euronext.liffe
• Kansas City Board of Trade
• London Metal Exchange
• Minneapolis Grain Exchange
• New York Mercantile Exchange
• New York Board of Trade
• Winnipeg Commodity Exchange
For a list of other commodity exchanges, please click on the following link:
http://en.wikipedia.org/wiki/Commodities_exchange
List of online Commodity Exchanges
IntercontinentalExchange, Inc. (NYSE: ICE)
Web: https://www.theice.com
APX Inc.
Web: http://www.apx.com
Enporion, Inc.
Web: http://www.enporion.com
Petroleum Place, Inc.
Web: http://www.petroleumplace.com
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