Singapore, July 15 - Standard Chartered Bank plans to expand coal trading operations by hiring more people this year and will aim to start physical trading in the commodity by next year, a senior bank official said on Wednesday.
The bank, which is "cautiously optimistic" on a rebound in commodity and energy prices in the months ahead, is also drawing up plans to boost its presence in sugar and palm oil as investors' interest in those commodities surge, said Sean Mulhearn, the bank's global head of commodity sales.
"We are certainly looking to expand our coal business this year," Mulhearn told Reuters in an interview. "In the energy sector, the first physical market we will be moving into will be coal. We are more likely to be trading in 2010, not 2009".
The bank, which started its commodities business three years ago, now has a global commodities and energy team of 50 people offering commodity-linked financing and structured products in precious metals, base metals, energy and farm products.
The bank last year hired Arun Murthy, former Asia head of Lehman Brothers' commodities team in Singapore, as its new global head of energy, and a few more ex-Lehman Brothers traders.
"The perfect storm in financial markets has created opportunities for us and has helped us to hire some of the best talent in the industry. This will help us to grow our business."
"We are looking to add more resources in Singapore, Dubai and China to meet our growing customer needs across various commodities," he added.
Mulhearn said the bank had tripled its customer base in 2008 from 2007 and is hoping to grow that by 100 percent this year.
He added the bank was currently holding discussions with industry officials and customers to study opportunities to get into iron ore trading, but had not firmed up plans yet. "It's a developing market and we have not reached a stage where we can say anything more than that."
POSITIVE PRICE OUTLOOK
Commenting on the outlook for commodities and energy prices, Mulhearn said oil, which has pulled back from its recent highs, might find some support from the China recovery plan crafted by Beijing, although there might be short-term pullbacks on the back of falling equity markets.
"I think we have seen the lows of crude oil. We don't see oil getting back there.
"There is a lot of positive news factored into the market. There is scope for commodities to gain further. We don't see oil getting back to $100 soon but we think $95 by next year is possible."
On Wednesday, U.S. crude for August delivery was trading nearly a $1 higher around $60.50 a barrel. The contract had settled at $59.52 a barrel on Tuesday, adding to a decline that shaved 11 percent from the price last week in the steepest weekly fall since January.
But crude oil prices are still about 59 percent below the record high of over $147 it hit in July last year.
Mulhearn added added that crude oil would be the second commodity, after coal, for the bank to consider getting into physical trading. And in agricultural markets, inquiries on palm oil and sugar markets were increasing fast.
"Sugar will be a big part of our agricultural market offerings. It's a big market in the Middle East and we are looking to expand there," Mulhearn added.
New York-traded raw sugar, which avoided the catastrophic crash in prices seen in a lot of other commodities since the middle of last year, has risen by more than a quarter this year, while palm oil prices are up 24 percent this year.