The world’s largest commodity traders are still making historically elevated profits, even as less-volatile markets mean their earnings have retreated from the bonanza that followed Russia’s full invasion of Ukraine.
At the FT Commodities Global Summit in Lausanne last week, executives at the largest trading houses and their bankers indicated both on stage and privately that although earnings for 2024 and the first quarter of 2025 would be lower than the boom years of 2022-2023, they remained higher than almost any other time in history.
The trading houses are some of the world’s largest companies measured by annual turnover, but most are privately owned by founders and employees, and many don’t report their results publicly. The industry has enjoyed an enormous windfall since the invasion of Ukraine and the energy crisis that followed it, with combined profits of more than US$50 billion in 2022 and 2023 at the four leading privately owned energy traders – Vitol, Trafigura, Mercuria Energy and Gunvor.
Commodity traders thrive on volatility and high prices, and both have retreated from the extremes of 2022. But the industry is still benefitting from disruptions to trade flows ranging from tariffs and sanctions to the crisis in the Red Sea, while the biggest players are also beginning to reap the rewards of billions of dollars invested in assets and diversification into new markets, helping to cushion the decline in trading profits.
Vitol’s profit for 2024 was lower than the previous year’s level of US$13.2 billion, but not drastically so, according to people briefed on the results, who asked not to be identified because the information is not public.
Trafigura, which saw annual earnings peak above US$7 billion in 2022-2023, is on track for net profit for the half year ending in March that’s roughly in line with the past two reporting periods, when it posted half-year profits of US$1.5 billion and US$1.3 billion, other people familiar with the matter said. The people cautioned that the company’s accounts have not yet been finalised and things could yet change.
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At the conference, Trafigura chief financial officer Stephan Jansma said that the company’s financial performance had “reached a new cruising altitude”.
“That cruising altitude is significantly less than the two years which were very high profitability, but also it’s significantly higher than the profitability we had before the Covid period,” he said.
Mercuria sees its earnings stabilising at an annual rate of about US$1.5 billion to US$2 billion, according to a person familiar with the matter. The company made US$2.1 billion in its financial year ending September 2024, Bloomberg has reported previously. That is lower than record profit of US$3 billion in 2022, but far higher than any annual profit before then. Until 2021, Mercuria had never made more than US$1 billion in a year.
Mercuria, Trafigura and Vitol all declined to comment.
Gunvor took some losses in the oil market last year – including a bullish play in the North Sea crude market that went wrong – but will still report the fourth or fifth-best result in its history for 2024, Chief executive officer Torbjorn Tornqvist said in an interview.
Vitol expects that margins and profitability are resetting at a higher level than before the pandemic, but below the recent boom, CEO Russell Hardy said at the conference. Despite the torrent of news, commodity markets have become “more bounded”, he said.
“The world is changing,” Hardy said. “The rhetoric – sanctions, tariffs, et cetera – is higher, but the reality is the volatility is lower.”
The trading companies are handing a significant chunk of their giant profits to their own shareholders, while also investing in assets like power plants and oil refineries, and diversifying into new markets such as metals.
“We’re now looking at five to 10 projects where the size of the ticket would be half a billion dollars or more,” Mercuria CEO Marco Dunand told the conference. “And that’s something we certainly could not afford to do without this extra profit.” BLOOMBERG