The group’s net profit for the first half to the end of March was $ 2.7 billion, up 27 percent from last year, with the company trading a record volume in oil and metals, its two main divisions. The results provide the first taste of how some of the largest commodity traders did as a result of the rapid rise in prices and the redesign of trade flows following Russia’s invasion of Ukraine in February. While the results only record the first weeks of the war, Trafigura said it had a big impact as customers turned to the company to help “rearrange their supply chains”. “The crisis in Ukraine has put supply chains under unprecedented pressure, especially in oil, gas and oil refining, as buyers try to find alternative sources of supply,” said Christophe Salmon, chief financial officer. CEO Jeremy Weir said he saw “no abandonment” in market conditions that have pushed up prices for almost every commodity since the beginning of the year. He warned this week that oil prices could become “parabolic” later this year, increasing the risk of a slowdown as supplies are strained. “Global supply chains remain disrupted and the geopolitical situation will continue to be turbulent,” he said, although he warned that inflation and limited access to energy, food and natural resources would affect economic growth for the next six months. Trading volumes increased in all of Trafigura’s major commodities, with the company handling a record volume of 7.3 million barrels of crude and refined products per day, equivalent to about 7 percent of global supply. That was a 14 percent increase from 2021, while it also traded 16 percent more metals and 13 percent more minerals. However, oil volumes are likely to decline after March, as the company has cut off most of its ties with Russia, where the private company was the largest crude trader by Moscow’s state oil champion Rosneft before the invasion. Increased volatility in commodity markets has put some pressure on the company, with rising prices forcing Trafigura to extend its credit line to “record levels” to meet higher buying and selling costs. Rising prices have also increased the amount of cash traders have to commit to futures contracts they use to hedge long-term contracts. Trafigura’s total credit lines reached a record $ 73 billion at the end of March, spread across 140 banks worldwide and up from $ 66 billion at the end of September, the company said. Underlying profit margins, a measure of return for commodity traders, fell to 2.8 percent over the period from 3.8 percent in 2021. Rising compensation costs due to increased margin calls have in some cases prevented access to futures markets, Weir said, adding that the situation will continue to make it difficult for all participants to move physical goods.
