The Times reports that an unnamed trader at Mitsui's Singapore unit, Mitsui Oil, had been covering up losses for more than six months after making losing bets on physical and futures naphtha trades. Naphtha is apparently a raw material used in the petrochemical industry. The newspaper says that the losses amount to around $81m, and will result in the unit going into the red to the tune of around $63m.
According to The Times, the trader confessed his misdeeds after a 'routine inquiry by company administrators in early November'. He had apparently been falsifying data to cover his tracks. Tokyo naphtha hit an all-time record-high of almost $670 a tonne in the summer, but prices have since fallen off around 20%.
Reuters says that the unit has now closed out all its futures and derivatives positions across all oil and petroleum markets, and there are doubts whether energy derivatives will be traded there in future. A Mitsui spokesperson has said that 'the trader is on a three-year contract, and whether he will be dismissed will be the result of our investigations of the matter'.
The $81m loss represents around 3.2% of Mitsui's annual net profit outlook, although the company has made it clear that the loss is not big enough to affect group profits, which are still expected to come in at around $2.52bn for the year to March 2007.