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US President Donald Trump’s “tweet-driven” uncertainty is imposing extra costs on commodity traders, slowing their investment plans and even prompting some European houses to consider changing their working hours to align with Trump’s social media output.
Trump’s frequent messages on X and his own Truth Social platform — often sent at odd hours — have sparked volatility in commodities markets over recent weeks and left traders scrambling to react.
Richard Holtum, Trafigura’s newly appointed chief executive, said he was “semi-seriously” considering changing traders’ working hours in Geneva to 2pm to midnight.
“The European hours are pretty quiet in the morning these days,” he said, at the FT Commodities Global Summit in Lausanne. “You just wait for President Trump to wake up and decide how your day is going to go.”
The president said this week in a social media post that he planned to impose 25 per cent in so-called secondary tariffs on countries that buy oil from Venezuela.
Bill Reed, chief executive of US trading company CCI, said the uncertainty around tariffs had left the company “scrambling” to understand the rules, work that “consumes an enormous amount of resources”.
That left companies in “wait and see” mode, hurting investment, he said. “It’s possible that people are holding off making decisions . . . it’s slowing me down,” Reed added.
Jeff Dellapina, chief financial officer of Vitol, the world’s biggest independent energy trader, said Trump’s posting and his flurry of executive orders were also making it harder to trade, undermining the detailed market research that commodity houses use to take decisions.
“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 said. That tends to “compress volatility, which then has obviously put us in much tighter trading ranges in core commodities”.
Gunvor, an energy trading firm based in Geneva, said it was willing to take less trading risk as result. “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,” said chief financial officer Jeff Webster. A consequence has been that certain commodities, including crude oil, are now trading within a much tighter range than in previous years.
“Our traders are having to work twice as hard to generate maybe half of the profit they were before,” Webster added.
Some trading houses struck a more optimistic tone, noting that volatility also brought opportunity for those able to profit from market dislocations.
Because commodity trading firms move raw materials from one place to another, they stand to benefit from market dislocations that create price arbitrage opportunities, if they position themselves correctly.
Guillaume Vermersch, chief financial officer of Mercuria, said in periods of disruption there was always “a solution to be brought” and opportunities for traders to provide services and solutions to customers that helped them reduce their exposure.
https://www.ft.com/content/6271d951-d9ed-4a48-8c14-e69905481185
