Post on 11-Apr-2018
Ferrous Metals Desk
Ferrous Metals Desk 155 Bishopsgate London EC2M 3TQ United Kingdom Email ferrousmetals@tullettprebon.com Tel +44 (0)20 7200 7477
Ferrous Metals Desk
Ferrous Metals Desk Contents
• Tullett Prebon – Company Overview
• Our team
• Ferrous Metals Desk – Overview
• Introducing Iron Ore
• Financial and Physical Brokerage Capability
• Iron Ore Indices
• Summary
Ferrous Metals Desk
Ferrous Metals Desk Tullett Prebon – Company Overview
• One of the world’s largest interdealer brokers listed on the London Stock Exchange
• Revenues of £910.2m in 2011*
• Offices in 21 countries worldwide, including London, New York, and Hong Kong, with more than 2400 employees
• Focus on: Rates, Treasury, Volatility, Credit, Equities, Energy & Commodities and Non-Banking.
*Source: Tullett Prebon Preliminary Results to 31st Dec 2011
Ferrous Metals Desk
Ferrous Metals Desk Our Team
• Over 25 years combined market experience
• Derek Newport and John Bush lead the desk, with each joining from Perret Associates and CF Partners respectively
• Derek’s ferrous experience stems from derivatives based roles at Credit Suisse, and physical commodity based roles at globalORE and Perret Associates
• John’s experience stems from fixed income and commodity roles at Industrial Bank of Japan, Cantor Fitzgerald, and CF Partners
Ferrous Metals Desk
Ferrous Metals Desk Ferrous Metals Desk - Overview
• Two strand business model based on: - Financial brokerage
• Financial derivatives – cash settled swaps and options (voice only) • We offer 8 ‘Virtual Steel Mill’ derivatives contracts:
- 4 x Iron ore contracts
- 2 x Steel contracts
- 1 x Coking coal contract
- 1 x Scrap contract
- Physical brokerage • Spec negotiation and matching of physical iron ore cargoes • Focuses on facilitating access for Mid Tier and Low Tier iron ore buyers / sellers.
• Tullett Prebon does not act as ‘principal’ – purely an ‘IDB’ role
Ferrous Metals Desk
Ferrous Metals Desk Introducing Iron Ore
• Iron ore is the world’s largest seaborne commodity
• Total seaborne tonnages reached approx 1.8bn tonnes in 2011*
• Market principally driven through Chinese demand
- Imports of approximately 695 million tonnes in 2011 and an estimated 700 million tonnes in 2012*
- Recent upheaval in industry pricing mechanism has resulted in a rapidly growing ‘spot’ market
• Sell side currently dominated by a small number of international mining firms based in Brazil, Australia, India, etc.
• Buy side currently experiencing squeeze on their profits
• Derivative enabled risk management is a new concept to this industry
*Source: Metal Bulletin Research Bulletin Research
Ferrous Metals Desk
Ferrous Metals Desk Financial Brokerage
Source: Metal Bulletin Research June 2012
Iron ore swap volumes since market inception
Ferrous Metals Desk
Ferrous Metals Desk Physical Brokerage
Physical iron ore volumes 2001 – Present
Source: Metal Bulletin Research June 2012
Ferrous Metals Desk
Ferrous Metals Desk Iron Ore Indices
• Three in operation
- The Steel Index (TSI): Financial standard
- Platts (IODEX): Physical standard
- Metal Bulletin (MBIO): Negligible
• Differing calculation methodologies have caused delay in industry consolidation around a single index
- Has affected iron ore swap performance
• Important to note that McGraw Hill (Platts) has recently acquired TSI showing the first signs of consolidation in the market
Ferrous Metals Desk
Ferrous Metals Desk Iron Ore Indices
Source: Metal Bulletin Research June 2012
Iron ore price volatility since inception of indices
Ferrous Metals Desk
Ferrous Metals Desk Summary
• Global reach
• Experienced team
• Cross sector exposure to both the physical and financial markets
• Special focus on physical Medium and Lower Tier ferrous participants