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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 contemplate altering their working hours to align with Trump’s social media output.
Trump’s frequent messages on X and his personal Reality Social platform — typically 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, stated he was “semi-seriously” contemplating altering merchants’ working hours in Geneva to 2pm to midnight.
“The European hours are pretty quiet in the morning these days,” he stated, on the FT Commodities World Summit in Lausanne. “You just wait for President Trump to wake up and decide how your day is going to go.”
The president stated this week in a social media put up that he deliberate 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, stated the uncertainty round tariffs had left the corporate “scrambling” to know the principles, work that “consumes an enormous amount of resources”.
That left corporations in “wait and see” mode, hurting funding, he stated. “It’s possible that people are holding off making decisions . . . it’s slowing me down,” Reed added.
Jeff Dellapina, chief monetary officer of Vitol, the world’s greatest unbiased vitality dealer, stated 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 choices.
“When you wake up in the morning, those statements can overwhelm any research we do, so it just naturally draws away risk capital from the market,” he stated. That tends to “compress volatility, which then has obviously put us in much tighter trading ranges in core commodities”.
Gunvor, an vitality buying and selling agency based mostly in Geneva, stated it was keen to take much less buying and selling threat as consequence. “This kind of volatility we are seeing, which is tweet-driven . . . is very difficult for us to trade around, so we are fairly risk-off right now for that reason,” stated 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 traders are having to work twice as hard to generate maybe half of the profit they were before,” 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 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 accurately.
Guillaume Vermersch, chief monetary officer of Mercuria, stated in durations of disruption there was at all times “a solution to be brought” and alternatives for merchants to supply providers and options to clients that helped them scale back their publicity.
