Clarity on Commodities Trading

Clarity on Commodities Trading

Global survey 
key findings

The trading environment

• 70 percent of respondents found low 
commodity prices to have a negative impact 
on their businesses.
• 51 percent of respondents expect commodity 
prices to stay at current low levels for a further 
one to two years with energy prices expected 
to increase first.
• Both low commodity prices (21 percent of 
responses) and the slowdown of economic 
growth globally (18 percent) are expected 
to be the biggest challenges to trading 
businesses over the next one to two years. 
• 88 percent are experiencing "some" or "strong" 
pressure on trading margins. Almost one-quarter
is revising their strategies as a result, and 
22 percent are discontinuing certain business 
activities.

Financing and investments

• Restricted access to funding is affecting 
one-third of respondents through increased 
financing costs.
• 30 percent have diversified sources of 
financing in order to maintain sufficient 
access to capital. 
• 25 percent see most potential to invest in 
upstream assets, 30 percent in midstream 
assets and 39 percent in downstream assets.
• North America is the region with the greatest 
growth potential, at one-fifth of responses.
• Most respondents said ROI on investments 
in the past one to two years had met or 
exceeded expectations. This was led by 
energy (72 percent) and metals (73 percent) 
traders. By contrast, agricultural traders 
generally experienced returns over the same 
period that were either negative or did not 
meet expectations.

Regulation

• 27 percent see greater regulation as the most 
disruptive factor in commodities trading in the
longer term. This compares to 16 percent citing 
government interference in the free market and 
15 percent saying it is the impact of policy 
changes on demand.
• One-third of respondents expect regulation to 
have a "medium" impact on existing operations. 
One-third meanwhile thought the impact is not 
yet clear.
• One in five state that complexity of regulations
is the main challenge in compliance. This is 
followed by the increased costs of compliance.
• Expectations of what will drive the higher cost 
of compliance were evenly split between further
use of external advisors, hiring legal and/or 
compliance personnel, allocating existing staff 
to compliance topics and additional investments 
in information systems.
• MiFID II leads the perceived compliance burden.

Sustainability

• More than one-quarter of respondents expect
carbon emissions to impact their business 
most over the next one to two years; 24 percent 
meanwhile expect energy consumption to 
have the biggest effect.
• 43 percent anticipate global warming 
to negatively or strongly negatively affect 
commodities trading in the long term. 
39 percent expect barely any impact.
• Global warming’s impact is most felt through 
severe weather (38 percent), stranded assets 
(27 percent) and resources not being available 
(20 percent).
• 17 percent of respondents said their organization
has a board commitment to sustainability 
and 12 percent stating that their firm includes 
sustainability in its KPIs.

Clarity on Commodities Trading