OREANDA-NEWS. August 08, 2013. Since January this year, ICBC concentrates on the service in buying/selling commodities on behalf of customers in response to their needs for hedging against market risk. During the first half of 2013, turnover of commodities trades on behalf of customers reached USD 600 million, twice the turnover in 2012. Commodities traded included copper, aluminum, zinc, nickel, iron ore, paper pulp, cotton and crude oil.

Brokerage service in commodities is a treasury service designed for companies engaged in the producing, processing and trading of bulk commodities and end-users. Financial instruments such as forwards, swaps and options are used to help corporate clients hedge their risks against prices fluctuations of bulk commodities. Currently, 27 commodities are offered for trading under five categories: precious metals, base metals, energy, agriculture products. Further, ICBC provides necessary services for customers to buy/sell crude oil, natural gas and paper pulp for hedging purpose which is not available in China's commodity exchange currently. To companies buying bulk commodity and wishing to hedge against the risk of rising raw material prices, they can enter a forward contract with ICBC to lock down the purchase cost. And for companies who sell bulk commodities, they can enter a forward contract with ICBC to lock down the sales price to avoid the risk of price drop.

An ICBC executive said, China is now one of the world's largest producers and consumers of bulk commodities. China is a top importer of base metals, energy and agriculture products in the world. Today, ICBC is one of the few commercial banks in China certified to engage in bulk commodity hedging. Backed by a team of dealers and specialists and cutting-edge system, ICBC is able to provide customers with flexible product portfolio designs and competitive prices in products and services, and a full range of reliable, highly efficient and convenient commodity trading services. Besides forwards, swaps, options, ICBC also offers upstream/downstream products such as gold leasing, commodity finance, for customers to hedge risks. Further, flexible trading terms can be drawn up to meet the different needs of customers. To the customers, cost of buying/selling commodities through ICBC is cheaper than direct hedging in international market. Moreover, personal particulars and trading details are better protected.