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Texte intégral
Bachelor thesis

Commodity trading : the role of physical assets acquisitions for energy trading companies

    2014

96 p.

Mémoire de bachelor: Haute école de gestion de Genève, 2014

Commerce international
Matières premières
English Commodity trading companies exist because natural resources are not well allocated. Producing countries are not those that consume the most, and the largest consuming regions are not supplied enough by their own natural resources reserves. In order to smooth out regional imbalances and fulfil supply and demand mismatches, commodity traders have to perform several activities in the supply chain. In addition to managing the logistics, their role has evolved over the years. Traditionally, trading firms relied only on pure trading, with asset-light structures, to make profits with arbitrage opportunities. Recently, they diversified in terms of the activities they perform, the geographical markets they target and the commodities they trade. To answer to the increasing complexity of markets and an intense competition, independent trading houses are increasingly investing in physical assets throughout the value chain: they now own and operate production fields, storage facilities, port terminals, refineries and distribution networks. With industrial and infrastructure acquisitions, energy trading firms can obtain several benefits. They are able to develop market knowledge, they diversify their activities, they secure access to sourcing and they optimise their supply chain. Ultimately, traders that engage in the supply chain are able to gain flexibility to quickly take advantage of changing market opportunities and generate extra profits. The assets they target are also the ones that provide optionality, in countries where infrastructure and logistical challenges discourage other actors to invest. As they improve the capacity of traders to spot market imbalances, physical assets also bring an increased level of risk and new challenges. In particular, trading firms have to mitigate higher operational and country risks, integrate new competencies and find alternative sources of financing. By investing in physical assets, energy traders extend their scope and become involved at various levels of the supply chain. However, their business model remains distinct from those of vertically integrated producers, as their objectives when investing follow different business logics. Whether investment strategies are profitable remains to be evidenced and will require further research, as the direct impact of physical assets acquisitions on margins is difficultly quantifiable. Moreover, the way the firms’ profits evolve may take different paths: some companies have seen their bottom line increase in the past few years, while others recently posted their worst results in a decade.
Language
  • English
Classification
Economics
Notes
  • Haute école de gestion Genève
  • Economie d'entreprise
  • hesso:hegge
License
License undefined
Identifiers
  • RERO DOC 232877
  • RERO R007932968
Persistent URL
https://sonar.ch/hesso/documents/314453
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