Unlock the White Home Watch e-newsletter totally free
Your information to what the 2024 US election means for Washington and the world
US President Donald Trump’s “tweet-driven” uncertainty is imposing additional prices on commodity merchants, slowing their funding plans and even prompting some European homes to think about altering their working hours to align with Trump’s social media output.
Trump’s frequent messages on X and his personal Fact Social platform — usually despatched at odd hours — have sparked volatility in commodities markets over current weeks and left merchants scrambling to react.
Richard Holtum, Trafigura’s newly appointed chief government, mentioned he was “semi-seriously” contemplating altering merchants’ working hours in Geneva to 2pm to midnight.
“The European hours are fairly quiet within the morning as of late,” he mentioned, on the FT Commodities Global Summit in Lausanne. “You simply anticipate President Trump to get up and determine how your day goes to go.”
The president mentioned this week in a social media submit that he planned to impose 25 per cent in so-called secondary tariffs on nations that purchase oil from Venezuela.
Invoice Reed, chief government of US buying and selling firm CCI, mentioned the uncertainty round tariffs had left the corporate “scrambling” to grasp the principles, work that “consumes an unlimited quantity of sources”.
That left corporations in “wait and see” mode, hurting funding, he mentioned. “It’s doable that persons are holding off making selections . . . it’s slowing me down,” Reed added.
Jeff Dellapina, chief monetary officer of Vitol, the world’s greatest impartial power dealer, mentioned Trump’s posting and his flurry of government orders have been additionally making it more durable to commerce, undermining the detailed market analysis that commodity homes use to take selections.
“Whenever you get up within the morning, these statements can overwhelm any analysis we do, so it simply naturally attracts away threat capital from the market,” he mentioned. That tends to “compress volatility, which then has clearly put us in a lot tighter buying and selling ranges in core commodities”.
Gunvor, an power buying and selling agency primarily based in Geneva, mentioned it was keen to take much less buying and selling threat as end result. “This sort of volatility we’re seeing, which is tweet-driven . . . may be very tough for us to commerce round, so we’re pretty risk-off proper now for that purpose,” mentioned chief monetary officer Jeff Webster. A consequence has been that sure commodities, together with crude oil, at the moment are buying and selling inside a a lot tighter vary than in earlier years.
“Our merchants are having to work twice as laborious to generate possibly half of the revenue they have been earlier than,” Webster added.
Some buying and selling homes struck a extra optimistic tone, noting that volatility additionally introduced alternative for these capable of revenue from market dislocations.
As a result of commodity buying and selling corporations transfer uncooked supplies from one place to a different, they stand to learn from market dislocations that create value arbitrage alternatives, in the event that they place themselves appropriately.
Guillaume Vermersch, chief monetary officer of Mercuria, mentioned in durations of disruption there was all the time “an answer to be introduced” and alternatives for merchants to supply companies and options to prospects that helped them scale back their publicity.
