LONDON: Metals traders are earning billions of dollars in a second consecutive blowout year for the sector, with several top trading houses notching up record profits.
Trafigura Group, which competes with Glencore Plc for the title of the world’s largest metals trader, made a record profit of around US$2bil in metals trading in its financial year that ended in September, according to people familiar with the matter.
Glencore, too, has been enjoying some of its best-ever profits, although its overall results have been marred by a US$480mil provision related to its exposure to iron ore trader Radiant World.
The vast earnings haul has meant that the champagne was flowing freely at London Metal Exchange Week, the main annual gathering of the global metals industry, which concluded last Friday.
Many individual traders said privately they are enjoying the best earnings of their careers, while simultaneously fielding job offers from rival companies, as well as newer entrants looking to grab a slice of the metals boom.
While many had expected fewer opportunities for metals traders after US President Donald Trump did not go ahead with tariffs on refined copper last summer, continued ambiguity over whether tariffs might yet be imposed has extended a bonanza available to traders shipping copper to the United States.
Meanwhile, metals including copper, gold and silver have soared to record highs, while the market for semi-processed copper concentrate – the bread-and-butter of many physical traders – has been unprecedentedly tight.
Trafigura’s metals division has had a record performance in trading, according to people familiar with the matter, who asked not to be identified as the results aren’t public.
The trading house is still finalising its results, which it usually reports in early December, and the audited profit numbers might be subject to adjustments and revaluations of assets like its smelting unit, Nyrstar, some of the people said.
Trafigura and Glencore both declined to comment.
Mercuria Energy Group, the most aggressive of a group of energy traders that have expanded in metals in the past few years, has also had a strong year.
Mercuria’s annual operating profits are on track to match or exceed last year’s level above US$300mil, people familiar with the matter said.
The company has plowed more than US$4bil into metals deals everywhere from Congolese copper to Indonesian aluminium as it seeks to grow its footprint in the market.
IXM, the metals trading unit of miner CMOC Group Ltd, is also on track for a record year, according to a person familiar with the matter.
CMOC’s half-year report said that IXM had “strengthened physical trading, achieving a new record high for the same period in terms of operating revenue.”
Representatives for Mercuria and IXM declined to comment.
Vitol Group, the world’s largest commodity trader, which is also building a metals trading business, is on track for profits of more than US$100mil this year, a person familiar with the matter said.
While that is well ahead of its performance in metals last year, it remains behind key competitors including Mercuria.
Vitol is in talks to strengthen its metals team, people familiar with the matter said. It has hired Billy Henty, who previously worked at Mercuria and Citigroup Inc, to trade iron ore in Dubai.
And Vitol executives have had discussions with former chief executive officer of IXM Kenny Ives.
It’s unclear whether the conversation will go anywhere, and Ives has indicated he won’t consider a new job until 2027 at the earliest, the people said. — Bloomberg
