The ‘traders‘ world, large intermediaries of raw materials, are the great beneficiaries because of the war in Ukraine, since they shot almost 60% your profit margin during 2022, setting a historical record by overcoming the barrier of 100,000 million dollars for the first time in a context led by the war between Russia and Ukraine.
Commodity merchants such as oil, gas and grain reached 115,000 million dollars, which means at the current exchange rate some 105,000 million euros of gross margin, which means triple the result of 2018, when this variable stood at 32,436 million, according to a report by the strategic consultant Oliver Wyman.
The study, which measures the profits companies made after subtracting costs directly associated with the saletakes into consideration all raw materials (oil, gas, precious metals and food), so it takes into account from cereals and oil to gold or lithium. However, it does not mention specific names in an industry made up of large corporations such as Glencore, Trafigura, Vitol or Cargill or divisions of funds or banks, as in the case of Goldman Sachs or JP Morgan.
The study concludes that, in a context marked by the volatility in the supply chains and the rapid ups and downs in prices due to the war in Ukraine, the oil and natural gas have been the main responsible the rise of commodity trade.
According to Oliver Wyman analysts in Spain and Portugal, the sanctions of the European Union (EU) and the United States against Russian energy caused the need to attract oil and liquefied natural gas (LNG) to Europe and to search for new sources of energy. This ended up causing “a disproportionate rise in electricity prices and greater interest in renewable energy to alleviate this energy deficit.”
Oil represents almost 37,000 million dollars
As a consequence, trade oil grew 55% and accounted for 32% of the total gross profit margins (almost 37,000 million dollars) while that of electricity, gas and emissions increased by 90% to 31,000 million (31% of the total).
On the other hand, the products Agricultural and food registered a rise of 45% up to 20,700 million (18% of the total) and liquefied natural gas (LNG) increased by 40% to 12,700 million (11% of the total)
Independent brokers at the forefront
Traditional non-asset-backed intermediaries – independents, banks and hedge funds – were the real protagonists of the market expansion to generate more than 60% of total revenueaccording to Oliver Wyman.
Specifically, the independent operators -five large companies- accounted for almost a third of the market in 2022, while banks hoarded almost 20% and hedge funds hoarded 10%.
Changes in flows and volatility, determinants
In 2022, traders benefited from changes in trade flows and high volatility caused by the war in Ukraine, which allowed large brokers with the greatest capacity to stand out above the rest and benefit from the price rises and falls.
Alongside these factors, the report also highlights stable demand growth and limited supply, which has led to higher price volatility and inflation, and the significant increase in collateral and cash needs, causing traders to withdrawn from the market due to lack of liquidity.
In addition, the size and flexible access to their capital and large amounts of cash set the successful traders apart. In this sense, the ‘traders’ who had invested in size and breadth, in addition to those who knew how to analyze the situation intelligently, managed to play a determining role in the growth of the market.