Int’l Raw Material Traders Earn Nearly US$250 Bln over Past 10 Yrs
Baku, April 16 (AZERTAC). The world's top commodities traders have pocketed nearly $250 billion over the last decade, making the individuals and families that control the largely privately-owned sector big beneficiaries of the rise of China and other emerging countries.
The net income of the largest trading houses since 2003 surpasses that of the combination of mighty Wall Street banks Goldman Sachs, J.P. Morgan Chase and Morgan Stanley, or that of an industrial giant like General Electric. They made more money than Toyota, Volkswagen, Ford Motor, BMW and Renault combined.
A review by the Financial Times of thousands of pages of companies' filings and non-public documents marks the first comprehensive account of the industry. The revelation of the traders' profitability will heighten calls for greater transparency from an industry that although central to the global economy is little understood and largely unregulated.
The review casts light on an era of remarkable growth in the sector that began in 2000 - when it made just $2.1 billion in profit - and massively expanded the trading groups' influence.
They rode the commodities supercycle caused by the industrialization of China and other emerging countries. The supercycle not only boosted commodities trading volumes, but also lifted the profitability of the groups' investment in oilfields, mines and farmland.
However, the review has also found that the commodities trading industry is now facing strong headwinds. Aggregate profit growth has stalled, and key measures of profitability are dropping year-on-year.
The world's top 20 physical commodities trading houses last year made $33.5 billion, little different from net income levels over the past five years.
The industry, which includes houses such as Glencore, Cargill, Vitol, Trafigura and Mitsubishi, is a vital nexus between producers and consumers of raw materials as diverse as oil, copper and wheat. Although some companies are publicly listed and disclose financial information, most are privately-held and in some cases have never published data on profitability.
The documents - including filings in commercial registries from the Virgin Islands to Singapore and confidential memos to bankers - suggest the industry is facing a slowdown as the global economy weakens and the growth of commodities trade slows. Further, the commodities market has become more transparent and competition has risen.
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