2023 - the second best year in history for commodity traders

The commodities trading industry had the second best year in its history in terms of profits in 2023, posting earnings of more than $100 billion while accumulating significant liquidity that can be spent on asset acquisitions or entering new markets, according to Bloomberg.

Even if the results in 2023 were lower than the absolute records reached in 2022, the profits recorded at the level of the entire sector far exceed the previous peaks, such as those of the period 2008-2009, shows an analysis by the consulting firm Oliver Wyman LLC.

"We're seeing very good margins everywhere and that's because the situation has continued to be tense on the supply/demand side," notes Adam Perkins, consultant at Oliver Wyman.

Even though many commodity trading firms have not yet disclosed their 2023 results, the profits of the largest independent trading houses are expected to show an average decline of 30% compared to the record results of 2022, according to the cited report by Bloomberg. Disruptions and disruptions in diesel and fuel oil supplies offset lower crude oil volatility (linked to Russia), while margins for natural gas and electricity transactions remained relatively high, according to the source.

The companies that buy, store and deliver the world's resources are emerging from one of the most profitable periods in their history with huge cash reserves, which will allow them to strengthen their role as a strategic supplier of energy, metals and food as the West continues its the transition from fossil fuels, for which there is a growing demand worldwide, the mentioned source shows. These companies have already bought oil refineries, storage spaces, power plants, even rival trading companies, while they have received significant support from countries such as Italy, Germany, the USA and Saudi Arabia, which want to ensure the supply of essential raw materials such as gas or copper.

"Traditionally, an independent trader would not hold such a position in terms of energy security, but they still ended up in this situation," points out Adam Perkins.

During this process, the executives who own shares or are partners in the trading companies, most of which are private companies, became multi-millionaires, as a result of share buybacks, but also based on dividend rewards, concludes the cited source .

• European gas prices, rising for the fourth day in a row

European natural gas prices extended their gains yesterday for a fourth day in a row, the longest period of advance since late January, driven by reduced deliveries from the Freeport LNG facility in Texas (due to some work). and the attacks on the Russian energy infrastructure. In addition, an unplanned outage has also occurred in Norway, reducing pipeline gas exports.

The reference futures price rose by up to 7.7% yesterday, on the Dutch market, this being the biggest "intraday" increase since January 3, according to Bloomberg data. Prices have rallied recently, after falling as much as 30% since the start of the year, as traders focus on factors that will affect stockpiling ahead of next winter.

The futures price of gas for delivery in April rose by 5.2% in the first part of yesterday, at the Amsterdam Stock Exchange, reaching 28.44 euros per megawatt-hour.