What people are talking about
Aurex attended FHA 2023 and noted strong activity levels across the commodities, ingredients, and food sectors with significant representation amongst the milling and alternative proteins segments. Industry players share similar comments that though business is "tough", it is mostly due to new entrants or competition from other firms.
The iron ore market has seen a tumultuous couple of weeks with loss-taking and senior departures being seen at some of the more established and traditional traders that operate within the ferrous sector.
Across the agricultural sector, there has still been strong activity across both the mainstream grains and oilseeds segments with concrete expansions and replacements across SEAsia (especially Malaysia and Vietnam).
Glencore has continued its pursuit of a merger of Teck Resources and a demerger of its coal business which thus far has been resisted by the Canadian miner. This would create 2 entities; CoalCo and MetalsCo.
Japan has announced a carbon pricing scheme to begin in April to help companies curb emissions and achieve their goal of carbon neutrality by 2050.
Vitol announced profits of USD 15bn for 2022, matching the previous 6 years combined off the back of the energy crisis.
What we are currently working on
Physical Metals Risk / Inventory Manager, Singapore
Base Metals Derivatives Trader, Singapore and Shanghai
Iron Ore Derivatives Trader, Singapore
General Manager, Thermal Coal and Coking Coal, Singapore
Metals Concentrates Trader, Shanghai
Wheat Trader, Singapore
Edible Nuts Trader, Singapore, Dubai
Corn and Byproducts Trader, Malaysia, Regional
Dairy / Dairy byproducts / Specialty Dairy traders, Singapore
Grains and Oilseeds, Singapore
If you are interested in any of these roles, please reach out to us via the contact details at the end of this newsletter. Alternatively, click here for more jobs.
Changes in Commodities Financing and Demand for Talent
This month has seen two areas of commodities financing pushed into the spotlight, firstly the sentiment that the larger and more traditional lending banks pulling out of commodities since 2019 means that they will miss out on the upcoming “boom” in battery-related materials, and secondly, as the Financial Times has noted, there has been a doubling of the share of RMB trade finance since the start of the Ukraine war.
Banks began to cut exposure to commodities following financing-related issues in China and Singapore in 2019 with the traditional European lenders scaling back teams. This coupled with the increased demand for financing of battery materials projects and trade has meant that producers have been instead looking to be increasingly funded by end users, shareholder equity, or government lending agencies, as well as family offices and funds. The knock-on effect on hiring practices as seen by Aurex Group is more emphasis on those from trade and structured finance backgrounds who can tap into the non-banking financial institutions and bring those relationships over to a physical player.
Since the onset of the Russian – Ukraine war, it has been noted that the share of RMB trade finance has doubled from 2% to 4.5%, putting it in contention with the Euro (currently representing 6% of the total). This is said to be primarily driven by Russian trade with China, particularly on oil, metals, and coal. Aurex Group has already noted that there is an increase in demand for Chinese trade finance talent who can tap into Chinese lenders. This had first been by companies from Russia such as those set up in Dubai, however with Chinese lenders becoming more comfortable with lending to commodities trade, and other traditional sources of financing drying up, a premium is now being placed on that talent that can access these institutions.
Director | Partner
+65 3165 0710
EA 18S9493 | R1328009
+65 3165 0710
EA 18S9493 | R1658515