Launched in October 2017, TradeCloud is a digital metals trading platform where producers, consumers and traders can meet to exchange information, negotiate contracts and conclude business.
Offers can be sent to multiple market participants at once; there is also a chat function to filter conversations between companies conducting business with each other.
“TradeCloud is a communications tool for the commodities industry - it’s a powerful connector and it can be a very valuable community,” TradeCloud CEO Simon Collins said. “We hope to build a marketplace and want to give people choice and discovery. Since inception, we have had over $700 million worth of trades initiated on the platform.”
Trading on the platform covers copper, aluminium, zinc and nickel in the form of refined metal, refined metal products and scrap. TradeCloud is set to add ferrous scrap to its suite next year and will engage the market about the possibility of adding alumina in the future.
The partnership between Fastmarkets and TradeCloud will begin with the reporting of aluminium premiums - the Rotterdam duty-unpaid and duty-paid in-warehouse premiums and the US Midwest delivered premium.
Clients can choose to have TradeCloud report deals on their behalf to Fastmarkets.
“We want to give clients the option of how they report their business, and should they choose, to automatically report their trades to Fastmarkets via the TradeCloud platform,” Collins said.
TradeCloud hopes to add to the number of data points collected for Fastmarkets’ premiums assessments, in turn helping to create robust numbers for the industry.
“It would take the burden of reporting away for some trading houses, producers and consumers if they chose to report via TradeCloud,” Collins said. “We want to produce liquidity, transparency and increase the amount of data used to assess premiums.”
Aluminium in particular has had a very volatile year due to persistent backwardations in London Metal Exchange forward spreads and the US sanctions imposed on Russian producer UC Rusal.
The benchmark Rotterdam duty-unpaid premium hit a high of $150-165 per tonne in April but Fastmarkets most recently assessed it on Monday December 10 at $65-75 per tonne, down more than 50% from the 2018 peak.
“We are starting [the reporting of trades to Fastmarkets] with aluminium because it is a metal which has seen extreme volatility this year. It is a low-stock environment and very liquid - there are a lot of trades that take place,” Collins said.
TradeCloud is open to adding more metals alongside aluminium to the list of those that can be reported to Fastmarkets in future.
“Of course we are interested in expanding this partnership beyond aluminium and reporting deals for other metals too,” he added.
Greater liquidity on the platform aimed for 2019
Next year TradeCloud will aim to increase the liquidity on its platform and continue to build its client base.
“We reached $700 million worth of trades in just over a year but currently we are operating at a rate of $100 million a month so our liquidity is picking up and our strategy is to increase this further,” Collins said.
Further ahead, TradeCloud wants to help create a “connective commodities web” where traders can complete all stages of deals on the platform.
“The next phase for the market is one of connectivity in which you are able to complete the whole process of the deal,” Collins said. “At the moment you can only agree the deal and documents have to be created elsewhere but ideally in the future digital innovation will allow us to link the whole chain, including fully settling and completing the full deal.”