The world for sale
This recommendation starts with a jaw-dropping chart included in a recent post from Javier Blas, illustrating the mega-profits of commodity-trading houses in 2022 extracted from the New York Times.
The moment I saw it, I realised immediately that I had to include The world for sale here. This book is written by Javier Blas and Jack Farchy, two leading journalists in the energy and raw materials sectors.
I read El mundo está en venta last year. Prior to that, I had not heard of Glencore, Vitol or Trafigura, though I was familiar with Cargill, but not with its full history. Nowadays I am subscribed to different economic newsletters and these world powers are frequently on the headlines.
This post is meant for those who might not be knowledgeable about the commodities trading world, as I was, and want to understand not only the origin of the graph in an entertaining way, but also the global economy´s least scrutinized corners.
Globalization and the industry of commodities trading have evolved together since World War II. Through the pages you get to know the names and life’s of key people (like Rich, Deuss and Dauphin among others) who made history in this opaque industry and whose actions influenced the history of the world as well.
Commodities are about those basic things we need to survive such as food and energy and other natural resources that allow us to sustain our life style, like metals.
Starting with oil, I am living nowadays in Rotterdam, so I was drawn to how the city and its port became the center of the global oil trade in the seventies, where companies did buy, sell, produce and refine oil, as some of the big names still do today. Most importantly, Rotterdam´s market was where the price of oil was decided.
There are more key moments explained, like the Soviet Union collapse and how the trading companies took advantage to export its oil and metals production. And there is much more including China and Africa as big demand creators and natural resources providers of the world’s economy.
In short, super cycles have provided benefits at an unprecedented scale for trading companies. Nevertheless, Glencore going public created an inflexion point in the sector, those companies won’t be invisible any longer.
Not all that glitters is gold, sanctions and the democratization of information are making the art of creating profits more challenging.
Nonetheless, looking at the stratospheric net income of these companies in the past 2 years, I wonder what type of supply chain integrations are creating that much value, what could other sectors learn from them and how are they going to continue responding to the changes in energy consumption trends, and when oil demand declines after picking in 2030.
