Global Steel Exchange (GSX) has this week launched an online trade exchange for international buyers and sellers of steel, including South African producers. This new venture, which cuts out the middleman, could provide an ideal platform for South African producers to trade their products competitively in the world market.
Founded by the world`s four leading steel trading companies (Cargill, Duferco, Samsung, and TradeArbed), GSX exceeded volume expectations during its month-long trading pilot. A total of 247 200 tons of more than 50 raw and semi-finished and finished steel products were traded across the exchange. The average transaction was 13 700 tons. The largest transaction was for 48 000 tons of Brazilian pig iron.
GSX registration is open to steel buyers and sellers of steel products or services anywhere in the world. Because GSX offers both a product and service exchange, registered members can directly negotiate for products, then move to the Service Exchange where they compare prices and negotiate for logistics and financing packages.
"International steel buyers and sellers are clearly ready to conduct business differently," said GSX CEO Lou Schorsch, "We undertook the pilot primarily to ensure the site functions well. We never expected to achieve the volumes we`ve seen over the past month."
GSX benefits buyers as they can negotiate directly with producers throughout the world for the best deal; sellers benefit as they no longer have to rely on middlemen for access to new buyers thereby leading to additional revenue. In turn, traders will be able to offer their expertise in managing risk and logistics in moving steel across the world.
During the pilot trading period, participating companies paid no transaction fee to GSX. In order to give the entire industry an opportunity to trade at no cost, GSX will charge no transaction or subscription fee for registered members until 1 June.
GSX founders and investors throughout the world have committed $5 billion in transaction volume over the next two years. That committed liquidity ensures a constant supply of online products. Over the last four weeks, nine different products were traded across GSX, including pig iron, billet, hot and cold-rolled coil, wire rod, stainless and pipe and tube. Participating buyers and sellers negotiated from Brazil, China, Germany, Japan, Russia, Singapore, South Korea, Switzerland, UK, Ukraine, and the US.
Cargill, Duferco, Samsung and TradeArbed announced their intentions of forming the first international steel trading exchange on 11 May 2000 in order to bring transparency and efficiency to the trading process.
"A lot of people have worked very hard over the past year to build a truly global enterprise - involving real market leaders - to serve the steel community. Starting today, international buyers and sellers can find each other online and negotiate directly for products and services," said Schorsch. "It`s exciting to envision where the industry will be this time next year, after 12 months of increased market reach, lower costs and better price realisations."
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The Global Steel Exchange increases transparency and reduces costs in international steel trading. Because buyers and sellers can directly negotiate, they benefit from new market reach and actual information about pricing and market conditions. GSX offers trading on two distinct marketplaces - users will trade more than 50 steel products on one, and will negotiate for packaged trading services on the other.
GSX was founded by the world`s leading steel trading firms: Cargill, Minneapolis, MN; Duferco, Lugano, Switzerland; Samsung Corporation, Seoul, Korea; and TradeARBED, Luxembourg. Strategic investors include 12 leading steel producers that are major participants in interregional steel trade. GSX currently has offices and representatives in Atlanta, Belo Horizonte, Chicago, Hong Kong, Jakarta, London, Moscow, Singapore, and Taipei. The company`s Web site is www.gsx.com.