Kedar Modi the guy that doesn’t let Gold go to Waste
Todays Blog guest is a good friend Mr. Kedar Modi, Entrepreneur with over 9 years of in-depth experience in physical, scrap metal trading business. Kedar has a comprehensive knowledge of the Scrap Metal Market, experience in trade execution, handling trading books, setting up zero desks, business expansion and trade operations across the globe.
1. To kick things off why not tell us a little bit about your personal background?
Born and raised in Calcutta, East India, a beautiful and charming colonial city where time stands still literally. The old India juxtaposed with the new India. Calcutta is Home.
Raised in a quintessentially Indian, large joint family, there was never a dull childhood moment. A family of business men, our line of business was cotton mills and fabicration of compartments for the Indian Railways and other projects for the Indian Government.
A sports enthusiast, I have been actively involved in sports and represented school, state in various competitions. I continue to play and watch! Tennis, Swimming, Cricket and Football! Now a certified Kettle Bell trainer (Certification from Onnit Academy, Texas) , I think sports and fitness give me a rush like no other. It is something which always second nature for me. Traveling has also always been a constant. I enjoy hiking, mountains and the exploring the beautiful jungles in India, although an ideal day would just be by the water.
Some of the things I just can’t do without is black coffee, a good single malt and a relaxing round of games on my PlayStation of course ? After finishing high school, I completed my Bachelor’s in Business and dove headfirst to test the waters in the family run business.
2. What brought you to Singapore?
Hailing from a family of businessmen, we work very closely with the Indian Government as we have factories that fabricate the casing for Indian Railways and other projects. There is also a cotton factory where surgical cotton is manufactured and packaged. While I was enjoying and learning the ropes of business, there was still a sense of achievement that was yet to be fulfilled.
I moved to Singapore in 2009. It was an attempt to take a step back and a step out of the family run business to study further and to create a niche of my own. It was risky and scary at the same time. My innate love for numbers and this entrepreneurial itch just pushed me along.
3. When did you first get into metals trading and how did that come about?
After arriving in Singapore, I joined a local trading company, however as a part of their Finance Team in the beginning. As I got more involved in the workings, I also started taking a keen interest in the trading aspect of the business. My mentor then helped me to learn the tricks of trading. I then moved on a Junior Trader in the same firm. The interest in trading peaked further and took me by surprise too. I discovered aspects of business and my self which I never knew existed. It helped my sharpen my knowledge and building a good work network.
After 5 years I moved on to be a part of a Japanese firm in Singapore where I was given the opportunity to set up a zero-trading desk. It has been one of the biggest learning curves of my career.
4. What’s the main different between trading ferrous and non-ferrous metals from your perspective?
In its simple form ferrous metal contain iron and non-ferrous metals don’t Ferrous metals and non-ferrous metals each have their own distinctive properties. The properties and nature of these metals determine their appropriate use.
Eg of Ferrous – Steel, Carbon steel, Cast iron etc.
Eg of Non- Ferrous Metals – Gold, Silver, Zinc, Copper, Aluminum, Tungsten, Titanium etc.
One of the major differences which we have observed during business is in trading quantity. Ferrous metals are mostly cheaper and are used very commonly in most applications. Hence, the requirement of ferrous metals is much larger than that of non-ferrous metals. Ferrous metals are mostly traded in bulk, transported in large vessels.
Non-Ferrous metals are more expensive especially gold, not as abundantly available in the world. Hence the volumes traded for these metals are lesser compared to ferrous. Some of the Non-Ferrous metals are listed on the LME and is easy to hedge, whereas you can have difficulty in hedging ferrous metals. The metal we trade most regularly is Tungsten Scrap, 1-2 full container load of this material is considered high volume
5. Tell us about WM Metals & Alloys?
After a year of toying with the idea, research and planning founded finally in 2017, WM Metals & Alloys Pte Ltd is a Singapore-based company specializing in trading of Non Ferrous Scrap Metals and Alloys within a wide range of industries. It’s a business remarkably close to my heart.
The company began as, a result of recognizing the challenges that many clients faced in procurement and processing of metals and alloys. Lead by experienced traders and equipped with strong sourcing capabilities from an extensive network of suppliers from countries such as Japan, Indonesia, Turkey, Russia and others.
The team at WM Metals & Alloys is constantly following the latest economic trends and movements in the industry to offer unequaled pricing and information to customers.
6. Where are you seeing most of your trading activity during Covid-19 and what has constrained it the most?
This year has seen some incredibly challenging and ever-changing scenarios which have impacted the trading business in many ways. WM Metals & Alloys business revolved heavily around the aerospace, automotive, oil and gas, and the powerplant industry. All of which have seen massive setbacks in their respective areas.
Covid induced travel limitations and lockdowns have nearly brought the automotive and aerospace industry to a standstill and are currently at all-time low. As most of our scrap did come from these industries it was a major setback. These limitations have also resulted in freight charges shooting up and this volatility caused difficulty in trade. As most of our buying takes place in Asia and selling in Europe we have seen some of our slowest trade months since inception.
Gold suffered one of the biggest bottlenecks in its history due to major Swiss refineries completely shutting down due to reliance on workers crossing the border from Italy, Dubai also shut down completely which pushed gold in Africa to over 20% discounts and people were chartering planes during that time, opportunity knocks I guess but that’s when your network helps to take advantage of these obscure situations.
We have seen some movement of scrap material but overall demand for mostly all metals have been low. Even though published prices are high we do not see demand arising at those levels and consumers are only buying if there is an urgent requirement. Consumers now are far from purchasing and stocking. Factories all over the world are working on 30-50% capacity and are only willing to buy stock on a month to month basis. There is stalemate between sellers and buyers as price expectations vs reality is at a different level. People are holding their stock and hoping for this pandemic to end, to enter better times.
7. Are you licensed to trade Precious Metals in Singapore?
Yes we are, REGISTRAR OF REGULATED DEALERS REPUBLIC OF SINGAPORE No.: PS20190001292
On 10 April 2019, the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 (“Act”) took effect to establish an anti-money laundering and countering the financing of terrorism (“AML/CFT”) regulatory regime for precious stones and precious metals dealers (“PSMD”) in Singapore. We took immediate steps to ensure we were covered in this area as it applied all the way down to minute amounts of gold. In fact during the course we say souvenir shops that offer gold key rings having to become licensed.
8. What sort of precious metals does WM Metals & Alloys trade?
Precious metals come in many forms from refined gold all the way down to waste materials containing precious metals, as a precious metals dealer in Singapore we need to know and understand the value of that entire range and where to have the metals processed for refining.
This is a small range of what materials we work with to recover precious metals:-
- PGM waste or scrap
- Gold Au & Silver Ag scrap solids or sludges and dross.
- PGM scrap from aerospace industry.
Different refineries are used for different metals and waste type recovery, the idea is to know your product and understand the refineries you can work with, this means we need to balance relationships globally and ensure both seller and refineries give us the right materials and results.
9. What sort of background checks do you need to perform to ensure your supply chain is legitimate?
In today’s precious metals world there are a number of industry standards that can be applied, the largest by far is the OECD, followed closely by the Responsible Jewellery Council which many use only to pay lip service to the industry they serve and a number of the larger refineries have even been exposed for not meeting those requirements despite such claims.
We follow the guidance of where we are operating and within the jurisdictions of where we buy the precious metals from but locally here in Singapore we follow the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 (“the Act”) which I have copied below for your guidance but further details can be found here.
Customer due diligence measures
5. Subject to regulations 8 and 9, for the purposes of section 16 of the Act, the customer due diligence measures to be performed by a regulated dealer before entering into any designated transaction with a customer are all of the following:
(a) obtain the customer’s identifying information;
(b) verify the customer’s identity using reliable and independent sources (such as the customer’s identity card, passport or other document of identity issued by a government, for a customer who is an individual);
(c) enquire whether the customer is the owner of the cash or cash equivalent received as payment in the cash transaction, and if not, to obtain the identifying information of the owner of that cash or cash equivalent;
(d) if the customer is selling any precious stone, precious metal, precious product or asset backed token to the regulated dealer, enquire whether the customer is the owner of the precious stone, precious metal, precious product or asset backed token, and if not, to obtain the identifying information of the owner;
(e) if the enquiry in paragraph (c) or (d) reveals that the customer is not the owner of the cash, cash equivalent, precious stone, precious metal, precious product or asset backed token (as the case may be), take reasonable measures to verify the owner’s identity using reliable and independent sources;
(f) ascertain whether the customer is acting on behalf of any other person, and if so —
(i) identify and take reasonable measures to verify the identity of that other person, using reliable and independent sources; or
(ii) if that other person is an entity or a legal arrangement, perform the customer due diligence measures specified in regulation 6.
10. When you fix the gold price which price indicator are you using to do so?
I guess the standard answer would be the LBMA AM or PM Fix but what with all the recent manipulation stories in the media there is less and less credibility on the settlement in the precious metals market. Each refinery will have a different settlement method to the next. We have seen more recently Dubai traders using the DGCX Spot futures
contract to settle price or even HK traders using Shanghai price.
There are still those who don’t fully understand the price fixing that refer to LME or even LMBA both of which are not even viable options. We are keen to see the new gold contract listed in India on the NSE take off as the price action is clearly moving to Asia over the last decade or so with the physical gold moving East. in the future I see less and less of a need to look to London for pricing.
11. If people want to get in touch or follow our companies updates where can they find you?