14 September 2007 04:59 [Source: ICIS news]
By Nurul Darni
SINGAPORE (ICIS news)--Asia’s sole naphtha online trading platform - e-OSN.com – has fallen victim to declining liquidity and will be dissolved by the year-end, industry sources said on Friday.
The Singapore-registered website had ceased operations since July, they added.
“The website cannot be sustained anymore because trading volume had fallen so much in the last two years,” a source at Shell Japan Trading, the largest equity partner in e-OSN.com said.
“We may come to an official decision to completely dissolve e-OSN.com within this month or in October,” he added.
Dwindling liquidity since 2005 was partly due to competition from other oil broking firms, one of the founding members said.
e-OSN.com, launched in September 2000 with an initial capital of US$4m, is an online broking site formed by nine trading companies from ?xml:namespace>
It also provides real-time market information for its registered members.
e-OSN.com was one of several internet-based trading platforms which mushroomed around the world in the late 1990s and early 2000s but failed to be sustainable over the long term.
Such platforms included e-NYMEX, EnronOnline and HoustonStreet Exchange Inc in the
When e-OSN.com operated in the first few years, its annual open spec naphtha transactions yearly was estimated to be around US$6-7bn, or equivalent to about 60% of the total transaction in the open spec naphtha market worth around 40m tonnes per year.
But the volumes shrunk in the last two years and soon most of its registered members, a total of 29 trading companies in all, scurried to trade with other brokers, the Shell Japan’s source said.
Many believe that a large chunk of the open spec naphtha business is now being handled by leading Japanese trader brokerage, Ginga Petroleum.
“The website is a niche market play and acts as an online broker by itself,” a senior broker at Japanese oil brokerage Ginga Petroleum said.
“But after some time people realize you need human relationship to sustain a business that is obviously lacking in online trading platforms such as e-OSN.com,” he added.
Other traders said that they preferred communicating with “voice” brokers via phone and exchanging market information – a clear missing link for this internet-based platform.
“We also don’t have the luxury to monitor the e-OSN.com screen all the time,” a trader at Mitsui & Co said.
“Whereas, with a voice broker you just let him/her know by phone your bid or offer and then wait for transaction, and you can dabble with other things while waiting,” he added.
Meanwhile, several outstanding issues related to payment and commission fees were currently being discussed before e-OSN.com will be officially declared defunct, sources said.
“We want to settle some outstanding payment issues first before handing over to the liquidator to dissolve it,” the Shell Japan’s source said.
The other equity partners in e-OSN.com are Itochu, Marubeni, Mitsubishi, Mitsui, Samsung, Sojitz, Vitol, Glencore and Aspen Oil.
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