Mitsui to investigate loss by trader in naphtha trading

22-Nov-06

Mitsui has launched an investigation into how a Singapore based trader was able to conceal the disastrous investment strategy for over 6 months before confessing to a loss of US$81 million (£42 million). The Singapore-based trader, who worked for Mitsui Oil (Asia) (MOA), hid the losses after making wrong bets on the price of naphtha. It is possible that the trader may have been wrong-footed by the volatile path of naphtha, which spiked to a peak in July before falling back 20%. A flood of Indian exports had hit the price, which was already weakening because of unexpectedly slowdown in demand in Asia. A task force had been set up to gain a clearer picture of the incident, while liquidating the trader's outstanding positions. The final figure for losses might still fluctuate slightly. The company emphasised that the episode was not large enough to dent group profits, which are forecast to be 300 billion yen (£1.33 billion) for the year to March 2007.