One of the largest physical commodities’ trading groups in the world, Trafigura is seeking a slice of India’s approximate $8 billion metal market. It has announced the launch of an online store, created with a company investment of about $300 million, in India to sell aluminum, copper and other metals. Trafigura is hoping to, in the bargain, become the first big commodities trader to cater to small manufacturers around the country.
Trafigura may bring in franchisees within the next two years, under its planned second phase of Indian growth. It already has three warehouses in India and is toying with the idea of building a network of about 30 more. Trafigura customers will have to take delivery of their metal purchases from these warehouses. Trafigura, co-founded by French billionaire Claude Dauphin in 1993, has been attracted to the Indian market by forecasts that say India’s primary metals market will grow up to 8 percent a year.
The online store will be named Lykos, and will sell consignments of 1 to 24 tons of aluminum, copper, lead, nickel, tin and zinc at index-linked prices, Trafigura said in a statement.
The trading firm’s move comes at a time when it, along with other metal merchants and banks, face over two dozen class-action lawsuits alleging the industry artificially restricted supplies from warehouses and inflated aluminum and zinc prices. Trafigura has denied the allegations.
Opon the launch of Lykos, Raoul Bajaj, CEO of Trafigura India Private Ltd, said in the statement: “There is a strong demand for refined metals such as aluminum, copper and zinc in smaller lot sizes, but currently the market suffers from a lack of automation, erratic supply, poor quality control, complex transportation logistics and opaque pricing.”
This is Trafigura’s second major move in India in as many years. In 2012, Trafigura PTE Ltd, a Singapore-based unit of the world’s third-largest crude oil trader the Netherlands’ Trafigura Beheer BV, had picked up a 24 percent stake in Nagarjuna Oil Corporation Limited (NOCL). The latter is setting up an oil refinery in Tamil Nadu. Trafigura has replaced BP as NOCL’s crude oil supplier.
Trafigura was expected to invest approximately $130 million for the stake and another $120 million for construction of storage facilities.
The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.