Dubai launches commodity finance, storage system

DUBAI (Reuters): Dubai Multi Commodities Centre said it launched an electronic system on Tuesday for inventory-based financing of commodities and a warehouse ratings program for lenders to weigh storage risk.

DMCC’s new Tradeflow platform is designed to help owners of goods stored in warehouses in the United Arab Emirates get working capital from banks, using standardised contracts as collateral.

The five-star warehouse rating system is intended to give potential financiers a better understanding of the storage risks involved when considering lending money to the owners of a variety of commodities from gold to grains.

DMCC is part of a Dubai government strategy to make the Gulf Arab emirate one of the world’s major trading centres for commodities.

“Trade is growing in Dubai. There is demand for more liquidity, but the banks are hesitant in the current environment to put money in the market,” Paul Boots, director of DMCC Tradeflow, told Reuters.

“So what we are trying to do is reduce the risks for them to make them more comfortable in lending.”

DMCC has already issued ratings of four or five stars for three large warehousing firms - Steinweg-Sharaf Fze, RHS Logistics and RSA Logistics.

“We expect to witness increased access to trade finance for not only DMCC-licensed companies but for commodity traders throughout the world who use Dubai as a trading hub,” DMCC Chairman Ahmed Bin Sulayem said in a statement.