Commodity Trading Resilient in 2023 Despite Uncertainty; Interconnections and Power Transition Shape Markets
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Commodity trading remains resilient, generating over $100 billion in 2023 despite decreased volatility and recession worries. However, markets face uncertainty and shifting dynamics.
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Two major trends will shape commodity markets - greater interconnections between markets and commodities, and the growing role of power in enabling the energy transition.
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As markets become more interconnected, new cross-commodity trading opportunities emerge. Players can capture value through portfolio optimization across commodities.
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Power will be central to replacing hydrocarbons. Traders can support the energy transition by enabling investment, balancing systems, and derisking supply chains.
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Players should focus on portfolio optimization to manage illiquid risks, embrace data-driven trading models, and build capabilities around high-potential niche commodities.