By Lauren Willington
Brokers and banks attempting to lure trading experts from UAE steel firms.
Brokers and banks are attempting to ‘poach' trading experts from UAE steel companies in a bid to hire them as consultants when the rebar futures contract gets underway at the end of October.
Several banks have created a brokerage in preparation for the launch of the trading platform on the Dubai Gold & Commodities Exchange (DGCX) on 29 October, but many are short of consultants with experience in the steel industry.
Among the banks to have created a brokerage are Mashreq Bank, Deutsche Bank, Standard Chartered Bank and National Bank of Dubai.
"Things are getting aggressive, especially from the banking sector's point of view," said a steel industry source, who wished to remain unnamed.
"The banks themselves don't know a thing about steel, especially rebar, so they need experienced people with solid knowledge on board to do the physical trade."
One trader to be approached was Robin Choudhary, director of steel company Regent International.
Choudhary has 18 years experience in the industry as a professional steel trader.
"I have been approached through the commodities network to team up with a major brokerage house to set-up a steel futures brokerage - this association is under consideration," he said.
Around 200 brokers have registered for the steel rebar futures contract, which will provide an electronic trading platform aimed at better protecting buyers against rebar price fluctuations on the open market.
Brokerage firm, Kombench DMCC, has signed up for the exchange and is on the look out for steel industry expertise.
"We're open to everything at this point in time," said the company's relationship manager, Pranav Barekh.
"We're going to take on a few insiders to see how the market works, because the exchange is going to be the first of its kind within the steel industry to be launched, and trading will be difficult because we don't have much data on the industry. At the moment, nobody apart from those working in the physical market has much of an idea about how it could work."
The exchange - whose June launch was postponed after traders complained about a lack of sufficient information on the system - was largely spurred by steel price volatility, which can alter drastically over a 30-day period.
According to John Short, executive director, Steel & Base Metals, DGCX, four more futures contracts for steel products are in the pipeline.
"In addition to rebar, we have a billet contract which relates to rebar, and we've also written contracts for coil, plate and stainless," he said.