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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 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, 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 look ahead to President Trump to get up and determine how your day goes to go.”
The president mentioned this week in a social media publish that he planned 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, mentioned the uncertainty round tariffs had left the corporate “scrambling” to grasp the foundations, work that “consumes an unlimited quantity of assets”.
That left corporations in “wait and see” mode, hurting funding, he mentioned. “It’s attainable that persons are holding off making selections . . . 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 government orders had been additionally making it more durable to commerce, undermining the detailed market analysis that commodity homes use to take selections.
“While you get up within the morning, these statements can overwhelm any analysis we do, so it simply naturally attracts away danger 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 danger as consequence. “This sort of volatility we’re seeing, which is tweet-driven . . . may be very troublesome for us to commerce round, so we’re pretty risk-off proper now for that motive,” mentioned chief monetary officer Jeff Webster. A consequence has been that sure commodities, together with crude oil, at the moment are buying and selling inside a a lot tighter vary than in earlier years.
“Our merchants are having to work twice as arduous 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 capable of 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 profit from market dislocations that create worth arbitrage alternatives, in the event that they place themselves appropriately.
Guillaume Vermersch, chief monetary officer of Mercuria, mentioned in durations of disruption there was all the time “an answer to be introduced” and alternatives for merchants to supply companies and options to prospects that helped them scale back their publicity.
