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US President Donald Trump’s “tweet-driven” uncertainty is imposing further 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 — typically despatched at odd hours — have sparked volatility in commodities markets over latest weeks and left merchants scrambling to react.
Richard Holtum, Trafigura’s newly appointed chief govt, 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 lately,” 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 international locations that purchase oil from Venezuela.
Invoice Reed, chief govt of US buying and selling firm CCI, mentioned the uncertainty round tariffs had left the corporate “scrambling” to grasp the foundations, work that “consumes an infinite quantity of assets”.
That left corporations in “wait and see” mode, hurting funding, he mentioned. “It’s potential that individuals are holding off making choices . . . it’s slowing me down,” Reed added.
Jeff Dellapina, chief monetary officer of Vitol, the world’s greatest unbiased vitality dealer, mentioned Trump’s posting and his flurry of govt orders had been additionally making it more durable to commerce, undermining the detailed market analysis that commodity homes use to take choices.
“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 vitality buying and selling agency primarily based in Geneva, mentioned it was keen to take much less buying and selling threat as consequence. “This type 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, are actually buying and selling inside a a lot tighter vary than in earlier years.
“Our merchants are having to work twice as exhausting to generate perhaps half of the revenue they had been earlier than,” Webster added.
Some buying and selling homes struck a extra optimistic tone, noting that volatility additionally introduced alternative for these in a position to revenue from market dislocations.
As a result of commodity buying and selling companies transfer uncooked supplies from one place to a different, they stand to learn from market dislocations that create worth arbitrage alternatives, in the event that they place themselves accurately.
Guillaume Vermersch, chief monetary officer of Mercuria, mentioned in durations of disruption there was at all times “an answer to be introduced” and alternatives for merchants to supply providers and options to prospects that helped them cut back their publicity.
