April 09, 2024 [Bloomberg]- When the world’s top commodity traders gathered for a glitzy summit in Switzerland a year ago, they trumpeted record 2022 earnings but warned of leaner times ahead.
The following year would see a hit to price volatility, profitability and margins, Vitol Group boss Russell Hardy told the firm’s bankers and other delegates at the Financial Times’ flagship commodities event.
Now the conference has come around again, and industry leaders will likely eat their words.
Results available so far show 2023 was another bumper year for the biggest merchants of oil, gas, agriculture and metals. The traders notched more than $100 billion in profits, according to reports from consultants Oliver Wyman LLC and McKinsey & Co.
Gunvor Group Ltd. recently posted its second-highest earnings, while Trafigura Group beat a 2022 peak. Vitol reaped about $13 billion, down from a year earlier but still more than triple the 2021 figure.
There are signs profits slowed in the second half of last year as volatility across markets generally eased, while shock moves in oil and gas prices caught many traders off guard.
Yet the commodity houses still enjoyed a windfall from market ructions caused by the invasion of Ukraine, and their traders are arriving at this year’s event in Lausanne with a lot of cash on the balance sheet.
That means talk is likely to center on how they will spend that money: whether they’ll splash out on refineries and storage facilities or appoint new hires to break into markets such as electricity.
The firms will undoubtedly snap up more plants, ships and depots as they look to beef up margins in the longer term. But the influx of cash also means a generous payday for the small groups of traders and executives who control many of the biggest names.
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