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Trafigura reports 'exceptional' oil trading result as markets recover

Highlights

Posts record net profit on renewed market volatility

Traded oil volumes rise 14% over 2020 to 6.4 mil b/d

Expects second-half trading results to be weaker

Trafigura, one of the world's biggest independent commodity traders, saw its oil trading volumes rise 14% during the six months to March 31 compared with 2020 amid renewed market volatility as the world emerges from the impact of the pandemic.

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The Singapore-based trader said crude and oil products volumes averaged 6.4 million b/d in its first-half financial year, up from an average of 5.6 million b/d in the 2020 fiscal year.

"This was an exceptional first half for our trading divisions by any standards," Trafigura Chief Financial Officer Christophe Salmon said in a June 10 statement. "The energy markets saw substantial volatility as the global economy started to recover from the effects of the pandemic, as cold weather in the northern hemisphere impacted energy demand and in response to other events such as the temporary closure of the Suez Canal."

Trafigura's higher trading volumes over the period sees it narrow the gap to top independent trader rival Vitol, which saw traded oil volumes slip 11% in 2020 to 7.1 million b/d.

The Singapore-based trader said its oil division reported a gross profit of $2.78 billion for the first half of the 2021 fiscal year, making up 65% of gross earnings alongside metals and minerals.

In December, the trading house said it had benefitted from a surge in geographical trade arbitrage opportunities during 2020, which were amplified by the uneven regional impact of the pandemic on demand and trade flows.

Brent crude prices have recovered by 78% over the six-month period to March 31, to hit two-year highs of over $72/b as the global economy rebounds from swingeing pandemic lockdowns.

Upbeat on global recovery

The company said it also saw a strengthening of its overall financial position in the last six months, with increased bank liquidity on favorable terms enabling it to handle larger trade flows.

Looking ahead, Trafigura said it sees a continued strong performance from trading operations this year, helped by shifts in supply and demand in global commodity markets and the world recovery from the pandemic. However, it noted that it does not expect second-half fiscal results to match the first-half performance.

"The energy transition that is now gaining momentum is already having a profound impact on our business -- in driving seismic changes in fossil fuel markets as well as fueling exponential increases in demand for certain non-ferrous metals," Salmon said.

Trafigura said it sees strong macroeconomic tailwinds supporting the global economy this year, including expansive monetary policy, fiscal stimulus, pent-up demand and record savings, which "paint a picture of a resilient and strong growth trajectory."

The company reported a record net profit for the period of $2.1 billion, from $542 million for the first half of 2020 as a result of increased trading volumes and higher volatility.