03 March 1997 00:00 [Source: ACN]
SUMITOMO Corp, one of Japan's largest trading houses, will start an Internet trading network for chemicals in Asia next year.
The company will set up a joint venture in May, called Asia Business Venture, with Singapore Technologies in Singapore to design a system for Internet-based commodity trading.
A system for trading used cars and electronic components will be online by March 1997. Sumitomo is still considering what chemicals will be traded, but plans to start using the system for chemicals and paper products soon after going online.
'With the new system, we will be able to provide more chances for different parties to participate in the market at less cost,' a Sumitomo spokesman said.
Buyers and sellers of commodities will be able to access the system with a personal computer to view offers and bids. The system will also allow users to search the list for products with the desired specifications. With the co-operation of banks and shipping companies, Sumitomo intends to use the system to arrange financing and logistics for deals.
A company in Europe started offering similar services in January for the trading of polymers. The company, 1st Polymer Market, plans to expand the system later this year to other commodity chemicals, including aromatics, olefins and intermediates.
Response has been positive, said Willem-Jan Shutte of 1st Polymer Market. The site has been accessed by users worldwide -many of them in the Asia Pacific, he said. In the first two weeks, sellers were offering 50 000 tonne of polymer on the system and buyers were enquiring for 80 000 tonne.
However, because all deals are confidential, there is no way of knowing how much material has been traded with the aid of the system, Shutte said.
1st Polymer Market is giving a free initial two-week trial, after which there is a US$300 annual fee to make offers or enquiries.
Some producers are worried about the transparency of the new Internet systems. With the system, buyers can see a range of offers from different sellers, giving them more real-time price information.
'It's an open market where everyone can participate,' said Shutte.
'Some producers are ready for it, but others say we are five years too early.'
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