Commodities traders strangle to fill a gap of 300bn.

 Chan­ging trade pat­terns have made the global flow of raw mater­i­als less effi­cient and more costly to

fin­ance and are also likely to push up the price of com­mod­it­ies for con­sumers, accord­ing to a new study by con­sultancy McKin­sey.

«Since the end of 2020, we have seen a doub­ling of the work­ing cap­ital require­ments in the com­mod­ity trad­ing sec­tor,» said Roland Recht­steiner, McKin­sey part­ner and lead author of the report. «We could see a sim­ilar increase by the end of next year if changes in trade flow mater­i­al­ise».

However, the cost of the fin­an­cing required to move these car­goes has risen sig­ni­fic­antly because of volat­il­ity in prices and rising interest rates.

On top of this, Rus­sia’s inva­sion of Ukraine has triggered a pro­found shift in global trade flows — often res­ult­ing in longer, less effi­cient ship­ping routes.

An example is coal, where prices have nearly tripled over the past year. In addition, as car­goes have to travel fur­ther, fin­an­cing costs rise.

The McKin­sey report pre­dicts aver­age ship­ping times will increase 8 per cent, energy prices rise three-fold, and interest costs will rise seven-fold, between the end of 2020 and 2024, and that work­ing cap­ital require­ments for com­mod­ity trad­ing glob­ally will increase between $300bn and $500bn.

Over the past year, even the world’s biggest trad­ing houses have had to increase their lines of credit and seek new sources of fin­ance. For example, Trafigura increased its credit lines by $7bn to around $73bn by the end of last year.

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