In our Q3 Market Review, we delve into the question of whether the commodities markets have returned to a sense of normalcy. Here, we share the editorial from our latest review, written by Paul Chapman, Managing Partner at HC Group.
Calm has spread through the commodity markets. Prices have stabilized, as has volatility. 2023 is proving a good year for traders but a far-cry from the highs of 2022, driven by unprecedented volatility.
There are subtle whispers that the peak is behind us. After all, the macro hedge funds – those bellwethers of financial interest – have been vigorously hiring just as in the last peak in 2012 – a trend we cover in our Liquid Fuels and Chemicals market summary, and other sections. Though for the funds too it seems performance, on the whole, has failed to match up to last year.
And there is good reason to believe in a new calm. China is slowing with an unfurling debt crisis. Interest rates have taken the wind out of renewables projects and many commodity flows, which rely on cheap financing (particularly relevant in the metals sector). The reordering of global flows – especially energy, in the wake of Russia’s invasion of Ukraine – have been established.
Across more than 50 pages of analysis and graphics, we delve into the latest talent trends impacting the global energy and commodities value chains including:
- The pivot to hydrogen and ammonia
- The need for natural language processing skills
- The appeal of Dubai’s Multi Commodities Center
We feature more than 350 talent moves showing which individuals have changed roles, and where they have gone. Special features include:
- An in-depth interview with Jonathan Perkins, CEO at Mabanaft
- Insights from Onyx Capital Group’s CEO Greg Newman, and the Chief Economist at Trafigura, Saad Rahim
A structural return to trading…
But let’s not get ahead of ourselves. Firstly, 2022 was of course unprecedented in terms of event-driven volatility. However, that is set against a backdrop of deglobalization, digitalization and the energy transition, all of which will drive change in the sector for years to come. Also, as a result of 2022, it is arguable the world has reset at a more fragile level, and is now much less resilient to global events and cold winters. Many of our HC Insider Podcasts have been picking through this dynamic.
It is precisely this new landscape of change and volatility that is driving long-term strategic plans of market participants to either create or enhance their commodity trading platforms - a trend we highlight in our Commodity Technology and Innovation section. Getting closer to customers, managing volatility, and capturing margin are all crucial in the energy transition. Getting closer to customers means navigating the energy transition with clearer market connectivity and insight. Marketing and trading provide risk management and returns – returns that are increasingly understood by investors and necessary in a world where hydrocarbons (arguably) will lose value.
Discover the latest talent trends and people moves in global energy and commodities markets.
Talent for the new normal
All this takes talent. Of which, supply has been constrained for years (fewer seats, lower investments), and for which skillsets are rapidly evolving. As HC Insider has regularly highlighted, the commodity markets are increasingly financialized, digitalized, and faster-paced. All disciplines are thus developing to keep up. Furthermore, as the pathways of the energy transition emerge, new skillsets and expertise are constantly being consumed by the sector.
In summary, there will be slower years – some of which may almost look calm. This may deter some new entrants. However, in the long run HC Group sees a backdrop of growth. It is also perhaps, in the market’s fragile state, too early to say that volatility won’t return with vigor in the coming months. Prepare for the new normal.