Top Trading Houses Speak at Commodities Conference

March 23 (Reuters) – Executives from the world’s biggest trading houses and mining companies are at the FT Commodities Global Summit this week, discussing market trends, cybersecurity and the impact of the conflict in Ukraine.

Below are comments from participants:

PIERRE ANDURAND, HEAD OF ANDURAND CAPITAL MANAGEMENT

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“We have very low stocks and things are getting worse every day. Russia is changing the game… We won’t be back to normal activities in a few months and we have to plan for that.”

“We have work to do to bring down demand.”

CHRISTOPHE SALMON, CFO OF TRAFIGURA

“We need a fully functioning commodity futures market and what we have seen is a decrease in open interest. Assuming the situation does not normalize, there will be consequences of this futures market ineffective on the physical.”

RICHARD DOLCETTI, CFO OF CASTLETON COMMODITIES

“Markets work best when there are a lot of participants…to the extent that initial margin requirements are so prohibitive that people have to go OTC (over-the-counter).”

“It’s really about navigating all that uncertainty and looking at the liquidity position. If you’re not going to trade exchange, and more OTC, then you’re trading liquidity risk for liquidity risk. credit. You need that balance.”

GUILLAUME VERMERSCH, CFO OF MERCURIA

“At some point, there may be a liquidity crunch in the extreme scenarios we’ve been discussing where banks can say ‘this is it’. That’s why diversifying sources of liquidity is important.”

JEFF DELLAPINA, FINANCIAL DIRECTOR OF VITOL

“Clearing banks have started to increase more than forex spreads, but that’s their prerogative and their credit risk. Of course we kick and shout and say that’s totally unjustified… but that’s natural, exchanges tend to lag calculations, and banks that bear credit risk tend to take different views.”

MARCO DUNAND, CEO OF MERCURIA “How do you set the price of natural gas if you don’t have an idea of ​​how things will react or what the EU will do in terms of sanctions. It is difficult to fix the price of anything right now,” Dunand said.

Regarding the longer-term economic outlook, he said: “From an economic point of view, Russia will be the loser… it cannot withstand a long period of sanctions. Europe will not come out particularly well. good either with a refugee crisis at the same time that we have to pay higher prices for raw materials.In relative terms, we will suffer much more than in the United States.

“…The big winner is going to be the GCC (Gulf countries in the Middle East). They’re going to be a power broker in this.”

JEREMY WEIR, CEO OF TRAFIGURA

Weir said the company moved very quickly to deal with liquidity constraints and margin call risks.

“From our point of view, we have returned to normality… The banks have been part of the process.”

Weir also raised concerns about potential fuel shortages.

“The diesel market is extremely tight and we may be heading for stockouts,” he said, referring to the depletion of stocks.

“Europe can probably afford to pay. The problem is what is happening to Africa and Latin America. diesel for power generation.

TORBJORN TORNQVIST, CEO OF GUNVOR

Tornqvist said the natural gas market is broken and Dutch TTF wholesale gas futures – used as a European benchmark – are no longer suitable for use for the growing liquefied natural gas (LNG) market.

“Gas marketability has exploded over the past five years and it has been shown that there is no proper benchmark to absorb this kind of volume,” he said.

“Everything is paralyzed now. We are in the middle of a storm.”

RUSSELL HARDY, CEO OF VITOL

“The shock of the Russian invasion on commodities is huge. People have reduced their activity on futures contracts, there is less open interest in oil markets, which increases price volatility,” he said. said Hardy.

“The longer the war lasts, the greater the risk of an economic recession.”

“If the dislocation of Russian oil extends to the 2-3 million barrels per day mark, it will be difficult to cope with it… We expect higher prices and this will reduce demand and we expect more stock releases.”

“We are already seeing some demand destruction.”

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Reporting by Julia Payne; edited by Barbara Lewis and Jason Neely

Our standards: The Thomson Reuters Trust Principles.

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