• Industry: Energy & Natural Resources
  • Type: Business and industry issue, White paper
  • Date: 10/10/2012

Commodity trading companies – Executive Summary 

Executive Summary

As commodities trading continues to globalize, many of the world’s biggest oil and gas and mining majors have set up commodity trading structures. KPMG International’s report titled Commodity trading companies - Centralizing trade as a critical success factor was recently developed based on the views of professionals from KPMG’s member firms worldwide who specialize in a range of global tax and advisory disciplines to help energy and natural resources companies understand the substantial benefits and risk management issues involved in these complex operations.

Strategically, commercially and logistically, the benefits of international trading structures for global commodity trading are clear. The most important of these benefits are:

  • Dynamic supply chain management: Centralizing trading and marketing activities in one or a few locations allows companies to consolidate sources of supply so they can better manage and meet customer demand.
  • 24-hour trading: With multiple trading companies in various time zones across the globe, a group of companies can boost its margins with non-stop trading as the world’s exchanges open and close.
  • Logistical efficiency: The ability to mix and match supplies from multiple sources also allows for greater supply chain stability, which can translate into higher trading margins. By making it easier to swap freight, companies can reduce their high haulage and control costs and improve logistics.

From North America and Europe to the Middle East and Asia, a number of locations around the world have emerged as vibrant centers for this activity. Preferred locations have investment-friendly government policies, strategic proximity to markets, and good financial services infrastructures.

According to the report, the trend to greater centralization of commodity trading will likely continue, and companies that take up this model with a sound structure that addresses tax and business risk stand to reap substantial benefits. The report is divided into three key sections where you can dive into the depths of the content more closely.

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Locations compared

Locations compared
An overview on what makes a good location for international commodity trading & highlights specific policies of today’s most used global locations.

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