25 November 2009 19:33 [Source: ICIS news]
Correction: In the ICIS news story headlined “Aromatics trading takes financial muscle and global reach” dated 25 November 2009, please read in the third paragraph … said Peter Johansen of Integra.… instead of … said Peter Johanssen of Integra.…. A corrected story follows.AMSTERDAM (ICIS news)--There is no longer a role for small traders in the aromatics industry, a panel of leading traders said on Wednesday.
In the last 20 years, the number of traders in the aromatics market had been reduced from around 40 to 10, and today’s trader needs to be financially sound with global reach, traders Trammochem, Integra and Interchem said during a panel discussion at the ICIS European Aromatics & Derivatives Conference in Amsterdam.
The key change in recent years has been in the speed required to respond to the increasingly fast information flow. Traders need to be flexible in their approach to swaps and arbitrages, and knowledgeable about a wide range of products, said Peter Johansen of Integra.
Traders’ customers are more demanding than they were even three years ago, so traders need to be expert in financing, inventory management and risk exposure, he added.
Also, it is a popular misconception that traders love volatility, said Frank Aerts of Interchem.
“Traders don’t like volatility - they just like to see a trend. It’s also a pain in the neck for traders,” he said.
An aromatics trader needs to balance being a service function to the industry with the need to make money, said Ashok Kishore, chief executive of traders Trammochem.
“There is a lot of talk about paper trading, and a lot about options trading, but there’s nothing going on,” said Kishore.
“We want to see more traders, because that brings greater liquidity, but they must be financially strong,” he added.
Liquidity does not necessarily create volatility, Aerts said. Toluene, for example, is completely illiquid, but can be very volatile, he said.
The 8th European Aromatics & Derivatives Conference, jointly organised by ICIS and International e-Chem, takes place from Wednesday through Thursday.
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