Top trading houses discussing market trends at FT Commodities Global Summit

Executives from the world's largest trading houses and mining companies are discussing market trends at the FT Commodities Global Summit in Lausanne, Switzerland, this week.


Reuters | Updated: 20-03-2018 19:42 IST | Created: 20-03-2018 19:41 IST
Top trading houses discussing market trends at FT Commodities Global Summit
Global population growth will be the most important driver for commodities markets in the years to come. (Image Credits: Wikimedia Commons)
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Executives from the world's largest trading houses and mining companies are discussing market trends at the FT Commodities Global Summit in Lausanne, Switzerland, this week.

The following are Tuesday's highlights:

IVAN GLASENBERG, GLENCORE CEO

"We have no strategic plan for the next 5 years for acquisitions. It's opportunistic like today with the coal mine (from Rio Tinto). A month ago I didn't think it would happen."

Glasenberg expects a copper supply crunch:

"I think so...when you look at new mines, new tonnage. Grades are going down at a lot of the big mines, some are closing. The new mines aren't adding enough...you've got to add another 500,000 tonnes per year.

"Provided demand is there and China doesn't crack. And we have 1-2 percent growth...yes, we could have a crunch."

ROBERT FRIEDLAND, IVANHOE MINES EXECUTIVE CHAIRMAN/FOUNDER

In reference to future of the copper market, Friedland sees tightening and higher prices.

"It's a lot harder than you think to find a really large copper mine, one that's at the bottom of cost break, and a long-term arrangement with local people. We went through that in Mongolia. The world needs probably 5 or 6 absolutely tier-1 copper mines in the next decade to be discovered and brought onstream but we just don't see them."

WILLIAM REED, CASTLETON COMMODITIES CEO

On the topic of possible consolidation, Reed sees traders as complementary to a degree as they specialize in different areas.

"There is some significant overlap but there is also some specialization whether it's geographic or different positions on the logistics chain or paper transactions."

TORBJORN TORNQVIST, GUNVOR CEO

"There's remarkably little activity by ship owners to have scrubbers built. It's too late now to have a profound impact on the fleet."

Tornqvist was referring to new rules by the International Maritime Organisation to cut sulfur content in fuel for global shipping in 2020. Scrubbers are installed on ships to remove sulphur.

"Refiners will adapt, some will have to stop."

JEREMY WEIR, TRAFIGURA CEO

"We see continued growth in the oil market at least until 2035."

"Global production of cobalt is about 100,000 tonnes ... but you're going to need in excess of 200,000 tonnes to meet consumption. In terms of impact, electric vehicles do not have a big impact on oil but a big one on metals."

Over the next few years, Weir expects more consolidation in trading.

"The bigger will get bigger--there will be consolidation but also a rise of small niche players."

MARCO DUNAND, MERCURIA CEO

"Only 0.2 percent of cars are electric. Even if you have tremendous growth, it will still be a small impact on oil for now."

Dunand added that Mercuria wants to be part of the transition to cleaner fuels and that gas and power account for 50 percent of the trader's turnover.

Dunand also expects more consolidation among trading houses.

"Generally speaking we work on a basis of net profitability of half a percent over turnover. Now that's a very small margin and there's little margin for error."

ANDREW MACKENZIE, BHP CEO

"When you think about electrification and what it will do to the demand for oil from 2030-2040 onwards, and certainly when we look at investments in oil we want to have ones that will pay back before that period.

"The backdrop for commodities is pretty optimistic ... In China, they have got a real sense to pursue the supply side of reforms and address environmental concerns."

Global population growth will be the most important driver for commodities markets in the years to come with the world spending $3.7 trillion annually on upgrading infrastructure.

China's One Belt, One Road initiative is expected to push steel demand up by 150 million tonnes over the next decade.

The main challenges for the commodities market include even tighter financial conditions and a greater disparity in corporate tax around the world, volatility in exchange rates and a rise in protectionism.

Mackenzie said BHP was not affected by planned U.S. steel and aluminum tariffs as it was a small exporter to U.S. markets.

On China: "They opted for real stability and that makes forecasting for us easier."

On potash: "When we look super long-term and given a substantial rise in population ... there is an opportunity there that we can take seriously. But they are just options that have to compete for capital with other divisions within our business."

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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