Vitol plans metals transfer to hedge in opposition to decline in crude demand | USAEMALL.com

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Vitol, the world’s largest independent energy trader, plans to expand into trading copper, steel, iron ore and aluminium as it hedges against the eventual decline of global oil demand, according to chief executive Russell Hardy.

“We quite like the idea of being involved in the bigger metals markets,” said Hardy at the Financial Times Commodities Asia Summit in Singapore. “We’ll have to find our edge, and our pathway in it. It would be a gradual buildout over the next five years.”

A metals trading business would help offset the eventual decline of the oil business, with oil demand expected to peak in about 10 years, Hardy added.

“There is a bit of a yin and a yang with the movement and growth within the petroleum sector, and the likely movement and growth in the metals sector,” said Hardy. “Metals is an area that is going to have a great deal of growth through the electrification phase” of the energy transition.

Vitol has quietly been poaching senior metals traders from rivals including Trafigura, Mercuria and Glencore as it expands its operations, but Hardy’s comments mark the first time Vitol has publicly outlined its metals strategy.

Vitol this year announced the purchase of Hong Kong-based Noble Resources, a China-focused coal and oil trader, for $200mn.

Hardy said he hoped the deal would help “catalyse” Vitol’s entry into metals markets by giving the company access to new customers.

The privately owned group, whose chief executive is based in London, had exited the metals market a decade ago when it sold its metals subsidiary Euromin.

Other trading houses including Gunvor and Mercuria have also been expanding their metals teams as they look for ways to tap into the energy transition. French oil major TotalEnergies said last month it was considering a move into copper trading.

Vitol reported bumper profits last year of $13.2bn and has been using some of those funds to expand its business.

Already the world’s largest independent oil trader, moving roughly 7mn barrels of oil a day, Vitol has also been expanding its refining business with its recent $1.8bn purchase of Italian refiner Saras.

Looking ahead to next year, Hardy said oil prices could stay within the $70-$80 a barrel range as flatlining petrol demand in China weighed on the market.

“The Chinese picture . . . has perhaps tempered people’s views of future demand growth,” he said, forecasting China’s demand for refined products to grow by about 700,000 barrels a day next year, lower than the growth level of the past two years.