Metal trading giants
Much like with the world of oil trading, the world of metal and mineral trading is changing very fast. The pattern is the same as everywhere else. Over time, the traditional western powers have lost their power over most financial markets. This is due to the fact that most of the strength of these world powers has dissolved. They less directly held a wide array of lands, as their empires fractured. Many nations now have direct control over their own produce. This has opened up the field for other powers to start influencing the market. Today, we will talk about the current trading giants of the metal and mineral market. As we will see, the prominence and importance of the Asian market has grown immensely.
Japan as a trading giant
Japan had been a rising star over the latter half of the 20th century. Especially in the 70s and 80s, Japan’s economy was growing rapidly. With the help of investments from the U.S., Japan flourished very quickly. This meant that this market needed supplies, in metals and minerals, to help with construction. Materials were needed to help with infrastructure and new buildings specifically. Combine this with the fact that Japan had to heavily reconstruct itself from the damage in WWII. Japan thus had a huge demand for materials worldwide to aid in this project, steel most of all. It soon became a trading giant, and its policies for trade had a great influence on the trade of metals at large. Japan preferred a reliable constant source of materials, rather than worrying about price. Therefore, under Japan’s influence, future contracts gained prominence.
China as a trading giant
Over the last two decades, though, China is the one leading trades in the metal market. Japan has mostly achieved all of the growth it needs; its economy has stagnated somewhat. China, however, keeps growing and growing. It is a much larger country, with even more room for growth. Therefore, it seems quite likely that this growth will continue into the coming future. Its focus is quite different from Japan’s.
China has more of a focus on spot trading, choosing their own prices, and getting materials quickly, mainly in iron-ore. This probably reflects the sheer speed at which Chinese infrastructure is growing. As a result, the focus on spot trading has become more important worldwide. It has also become more expensive, due to its demand. The dominance of spot trading means that, overall, the market is a bit more unstable. Traders need to form close relationships with each other, as a result.
There was, however, a bit of a drop in spot prices following the 2008 housing recession. Some took advantage of low contract prices to then sell at the higher spot prices. This soon caused a crash in spot prices for the remainder of the recession. Following this, spot prices did eventually recover to their previous highs.
To get an insight into some of the most important metal trading companies, we will focus on the trade of copper. This is a market that the trading giant China has a great reliance on.
Important copper companies
Codelco is a company located in Chile. In fact, the Chilean government owns it. As Copper mining is so productive in the country, the company has ended up owning 19% of the world’s copper reserves. In 2017 alone, it produced over 1.8 million tons of copper past refinement.
Freeport-McMoRan is a copper mining company with mining operations around the world. Some of these are in the Congo, in Indonesia, and in North America. It also produced nearly 1.7 million tons of refined copper in 2017. This makes it only second to Codelco. It has its headquarters in Pheonix, Arizona. It is from here that it makes deals with any trading giants. In fact, a Chinese company bought all their ownership stake. Such is the importance of copper to the Chinese market.
Next up, we have BHP. This is a company from Australia. It also has its mines in the country of Chile. In comparison to the last two, its copper product is noticeably lower. It made a total of 1.3 million tons of refined copper in 2017. However, it also has focuses on a wide range of other metals and minerals. So, the company is still very influential in the metal market business.