Glencore Trading Profit Is on Course to Smash Through Record

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(Bloomberg) — Glencore Plc’s first half-profit from trading commodities will be bigger than it typically reports for an entire year, putting it on course for a record 2022 as the resources giant cashes in on soaring prices and volatility.

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The commodity trading industry is enjoying its most profitable period ever, as Russia’s invasion of Ukraine sparks wild swings in markets that were already at or near record highs even before the war started, creating opportunities for the traders who transport the world’s resources.

Glencore expects trading profit in the first half to exceed $3.2 billion, the company said. That compares with record profit of $3.7 billion it delivered in the whole of last year and puts it well ahead of a long-term annual guidance range of $2.2 billion to $3.2 billion.

Read: War Brings an Uncomfortable Windfall for Commodity Traders

“Our marketing segment’s financial performance has continued to be supported by periods of heightened to extreme levels of market volatility, supply disruption and tight physical market conditions, particularly relating to global energy markets,” Glencore said in a statement Friday. However, the company conditions will be closer to normal in the second half of the year.

The commodity giant has been one of the biggest winners from the global energy crunch and from the surge in prices driven by Russia’s invasion of Ukraine. The company is expected to report a bigger full-year profit than mining giant Rio Tinto Group, according to analyst consensus estimates compiled by Bloomberg.

Glencore’s update also included details on its coal business, which has become one of its biggest earners after prices spiked.

However, the company cautioned the volatility across markets resulted in its average coal sale price showing a bigger discount to the benchmark, while costs rose sharply in the first half as royalties and energy costs increased. Glencore says it now expects the cost per ton to be as much as $78 from its earlier forecast of $59.3 a ton.

Rising costs have hit the entire industry, as the biggest miners grapple with inflationary pressure, especially on labor and power costs. Miners including Anglo American Plc and Freeport-McMoRan Inc. have previously forecast steep cost rises for the year.

The volatile markets have helped boost earnings for commodities traders. Trafigura Group posted record first-half profit last week.

(Updates with coal business details from sixth paragraph)

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