Sumitomo to Expand Overseas Commodity Business; Boost Hiring

By Ichiro Suzuki

Feb. 13 (Bloomberg) -- Sumitomo Corp., Japan’s third-largest trading company, plans to increase staff numbers at its overseas commodity business offices by as much as 26 percent within two years as it expands its international operations.

The company will add up to six staff at its trading offices in London, Singapore and Houston, boosting the total to as many as 29, Koichi Iwanaga, general manager of Tokyo-based Sumitomo’s commodity business department, said in an interview.

Raw material prices, measured by the Standard & Poor’s GSCI Index of 24 commodities, have plunged 62 from a high reached on July 3 as the global economy slowed. Mining companies are cutting production following the tumble and some investors, including Jim Rogers, are forecasting a market recovery.

“With commodity prices having bottomed, this may be a good time for hedging,” said Eli Owaki, an economist at Nomura Securities Co. in Tokyo. “There will be risks of price fluctuations in the future.”

Raw materials traded by Sumitomo include crude oil, gas, gold, platinum, copper, aluminum and nickel.

The company’s 15-staff London office will add two or three employees, the three-person Singapore operation will add one or two and the five-staff Houston office, established last August, will have one more employee, Iwanaga said yesterday. Physical commodities and derivative products are traded at the offices.

The Singapore unit will be expanded to equal the size of the London office over the next three-to-five years to tap into rising demand in India, Thailand, Vietnam, Taiwan and South Korea, Iwanaga said. Sumitomo is also considering setting up a subsidiary in Singapore, which offers tax benefits, he said.

Customers Increasing

“With our customer base expanding overseas, we are looking to increase the number of professionals we have specializing in each of the different commodities,” Iwanaga said.

The company aims to increase profit in the commodity trading business by 25 percent over the next two years, Iwanaga said. Sumitomo’s financial and logistics division, which includes the commodity business, posted net income of 5.1 billion yen ($56 million) in the year ended March 2008.

The fundamentals of commodities are “unimpaired” and prices will rebound when a lack of new supply leads to shortages, said Jim Rogers, chairman of Rogers Holdings, said in December.

Michael Lynch-Bell, the head of Ernst & Young’s Global Mining & Metals Transaction Advisory Services, said Feb. 11 that commodity prices may recover by the end of this year.

To contact the reporter for this story: Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net.