Metals Traders Reap Bonanza With Another Year of Record Profits

(Bloomberg) -- Metals traders are earning billions of dollars in a second consecutive blowout year for the sector, with several top trading houses notching up record profits.

Trafigura Group, which competes with Glencore Plc for the title of the world's largest metals trader, made a record profit of around $2 billion in metals trading in its financial year that ended in September, according to people familiar with the matter. Glencore, too, has been enjoying some of its best-ever profits, although its overall results have been marred by a $480 million provision related to its exposure to iron ore trader Radiant World.

The vast earnings haul has meant that the champagne was flowing freely at London Metal Exchange Week, the main annual gathering of the global metals industry, which concluded on Friday. Many individual traders said privately they are enjoying the best earnings of their careers, while simultaneously fielding job offers from rival companies, as well as newer entrants looking to grab a slice of the metals boom.

While many had expected fewer opportunities for metals traders after US President Donald Trump did not go ahead with tariffs on refined copper last summer, continued ambiguity over whether tariffs might yet be imposed has extended a bonanza available to traders shipping copper to the US. Meanwhile, metals including copper, gold and silver have soared to record highs, while the market for semi-processed copper concentrate — the bread-and-butter of many physical traders — has been unprecedentedly tight.

Trafigura's metals division has had a record performance in trading, according to people familiar with the matter, who asked not to be identified as the results aren't public. The trading house is still finalizing its results, which it usually reports in early December, and the audited profit numbers might be subject to adjustments and revaluations of assets like its smelting unit, Nyrstar, some of the people said.

Trafigura and Glencore both declined to comment.

Mercuria Energy Group, the most aggressive of a group of energy traders that have expanded in metals in the past few years, has also had a strong year. Mercuria's annual operating profits are on track to match or exceed last year's level above $300 million, people familiar with the matter said. The company has plowed more than $4 billion into metals deals everywhere from Congolese copper to Indonesian aluminum as it seeks to grow its footprint in the market.