Our vision for the future is that all commodity transactions take place on digital platforms
by Dagmar Dieterle
Interview with Dr. Sebastian Kreft, Managing Directors at Metals Hub GmbH
marketSTEEL: Why did you start Metalshub?
Dr. Kreft: The idea for Metalshub has developed during my previous job. As Head of Sales at Anglo American, I was responsible for the worldwide sales of nickel products. There I saw that transactions are still taking place offline, no digital tools were being used. But many challenges that come up with commodity transactions can be solved with the support of technology. It starts with new customers: If we had a new customer, they have to be checked first. Credit risk assessments, which take an extremely long time, also played an important role. Then there were also challenges in terms of organising logistics, especially for smaller deliveries, and the issue of financing, for example, if the customer requested long payment terms.
So it can be very complex to win a new customer. And I realised that using a digital platform can add a lot of value.
marketSTEEL: Metalshub operates as a digital platform for metals and ferroalloys. How does this work in practice?
Dr. Kreft: Well, as a buyer working for a steel mill I have a certain requirement. For example, I want to buy 24 metric tons of manganese metal and create an enquiry, which we call a listing. All sellers of manganese metal instantly receive a notification about the listing: They are informed about the specific requirement and can then submit in their offer. In addition, Metalshub will then offer certain additional services to the seller. For example, you can get an instant transport quotation. How high are the transport cost? How much would a credit insurance cost for this transaction?
marketSTEEL: What can I profit from as a customer? What are the advantages for me as a customer?
Dr. Kreft: As a buyer, there are two big advantages: Firstly, the entire process is digital, which means it is much faster and more efficient than traditional methods via telephone and e-mail. And then you benefit from the larger reach. You get access to suppliers that you may not have had on the radar before.
For a seller, the platform is a great opportunity to enlarge the customer base. Customer acquisition costs are rarely measured in many companies, but they are often very high. The cost of acquiring new customers is very low through our platform. At the same time, it is our stated goal to reduce transaction costs. And if the cost per transaction drop, this means that a supplier can serve more customers with the same resources.
marketSTEEL: How do you ensure that suppliers are reliable?
Dr. Kreft: At Metalshub we carry out a so-called Know Your Customer (KYC) process. This means that we review each company for beneficial owners, for solvency and for REACH registrations. This way we ensure that only reputable companies get access to the platform. At the moment, we have a reject rate of about 50 percent. So, every second company that registers will not be approved for various reasons. This is already a first important check that we do. We also have a rating system. For example, you can immediately spot: This supplier has already made 50 successful transactions on Metalshub. Of course, this is a strong indicator that the company is more trustworthy than a company that has not done any transactions yet.
marketSTEEL: Raw material producers are located around the world. How do you act worldwide?
Dr. Kreft: We are a global company. At the moment, our customers are still predominantly in Europe, but the traders and producers on the supply side are global. It is often the case, for example, that a Brazilian producer has a sales office in Europe. Anglo American has its sales office for Europe, for example in London. Many raw materials traders have a sales office in Switzerland. In principle, these are also the companies that offer their goods via Metalshub.
marketSTEEL: That means Metalshub is offered in German and English?
Dr. Kreft: The platform currently operates in seven languages. We started with German and English. Then came French and Spanish. And later Italian. A Portuguese language version is planned. Now we also have a Chinese and Russian language version. We also try to limit the free text fields, so that our customers have the opportunity to communicate here in their own language.
marketSTEEL: The US has introduced tariffs through US President Trump. The EU has responded. How do you react to this situation?
Dr. Kreft: For us, this has only a secondary impact, as our customers are mainly based in Europe and we are not yet active in the US market. There is, of course, an effect in that many of the steel products that would normally have been exported to the US are now being diverted to Europe due to the tariffs. Of course, this means a tougher competition for European steelmakers.
marketSTEEL: If you had to develop a vision: Where does Metalshub stand in ten years?
Dr. Kreft: Our vision for the future is that all commodity transactions take place on digital platforms. So in five to ten years, transactions will no longer take place via fax, phone, Whatsapp or email, but via digital platforms and we want to be the world's leading platform for ferroalloys and metals.
More information: www.metals-hub.com/