Skip to main content

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

Trader

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.

www.sba.tax

Labels:

Comments

Post a Comment

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...
Post a Comment
Read more

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...
1 comment
Read more

EU debt reduction

  Brussels wants to give EU capitals extra time to curb their debts and create space for public investment as part of an overhaul of the EU’s deficit rules .  The European Commission would table a proposal at the end of the month to reform the Stability and Growth Pact ,  under which it would work out multi-year ,  country-specific plans with capitals for getting their debt burdens under control ,  EU officials said .  The proposals come as member states face mounting fiscal burdens as they spend hundreds of billions of euros sheltering businesses and households from the energy crisis .  Under the new blueprint ,  the commission would propose a four- or five-year plan to an EU member state to get its public debt burden on a credible ,  downward trajectory ,  officials said . The national fiscal plan would need to pass a debt sustainability analysis and be approved by the commission and EU council .  The new regime would ditch an EU ...
Post a Comment
Read more