Lugano life less sweet for the coal and steel men
By Silvia Antonioli and Jacqueline Cowhig
LUGANO, Switzerland (Reuters) - The climate is not quite so balmy nowadays in Lugano, the Swiss idyll that discreetly stages the drama of international coal and steel trading with a colorful cast of Italian and Russian tycoons.
The talk of the town is the demise of trader Carbofer, from trading billions of dollars of steel and coal in 2008 to a shutdown of trading after failing to secure much-needed cash injection.
Dealing in steel and coal has become a risky business in the last few months at the center of a highly specialized trading ecosystem that links Italian industry with Russian raw materials and moves coal around the world to feed steel mills.
Markets are too volatile, less profitable and much riskier and the cost of credit is escalating, especially for the niche players around the Lugano lakeside, much less heavyweight than the big commodities traders across the Swiss cantons in Geneva and Zug.
"We have to cut costs like everybody else because this is a difficult trading environment, credit is a challenge and costs have been rising," said Alberto Ravano, President of Bulk Trading SA, active in the coal market.
A trader excuses himself for being late for a meeting: his company's board meeting, usually a two or three hour affair, went on until evening. The company has decided to trim down its structure, he says. Jobs will go in Lugano and elsewhere.
The shadow of Carbofer falls long over the red roofs of the city which likes to say it adds Italian allure to Swiss efficiency.
Carbofer has fired many of its employees and agreed to move its steel trading team to Starglobe, also in Lugano. The coal traders have left to set up a company with a Monte Carlo-based conglomerate, effectively leaving it deprived of any trader. Continued...