Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
French energy giant TotalEnergies is studying whether to start trading copper, potentially paving the way to expand its vast oil trading operations into metals for the first time to capitalise on the energy transition.
Rahim Azouni, senior vice-president of crude, fuel and derivatives trading, said the company has been “studying the case” for trading copper, in remarks made at a closed-door conference in London, according to several people who attended.
Azouni cited the energy transition as the reason to consider expanding into copper trading, but added that it had not yet decided to do so, people who heard his remarks on Wednesday told the Financial Times.
TotalEnergies already has a vast trading arm that handles oil products, gas, power and new fuels, though it does not disclose the size of its trading activities.
His remarks come as a growing number of oil traders are expanding into metals to capitalise on the world’s need for copper, which is used in electricity cables, buildings and electric vehicles. The race for cleaner energy is also boosting demand for aluminium and nickel.
While global copper demand is expected to surge over the next decade, the oil market has been lacklustre this year with China’s reduced demand for the fossil fuel keeping prices low despite war in the Middle East.
Traders and trading firms that have built their fortunes around trading oil, recording bumper profits during the energy price volatility since Russia’s invasion of Ukraine in 2022, are increasingly moving into metals to capitalise on demand.
Vitol, the world’s largest independent oil trader, has recently returned to metals trading, a business that it exited in 2014.
This year it poached two aluminium traders from a rival firm, and is focused on aluminium as part of its energy transition strategy.
Geneva-based commodity firm Mercuria is also expanding into metals, building a 60-person metals trading unit under Kostas Bintas, formerly the co-head of metals at rival Trafigura.
Even hedge fund manager Pierre Andurand, one of the world’s top-performing energy traders, has shifted to focusing on copper and other metals. Earlier this year he predicted that copper would reach $40,000 a tonne over the coming years, quadruple its current price.
Tom Price, resources analyst at Panmure Liberum, said that low volatility in the oil market, and long-term changes in energy systems, were driving the shift to metals.
“They can see oil demand and the oil market in trend decline, and they are trying to de-risk that world, by switching to [the] metals world,” said Price, adding that the transition might be difficult for companies built around oil trading.
“These markets aren’t structured the same way as oil,” he said. “In principle they can do it, but in practice it will be a struggle.”
TotalEnergies Chief Executive Patrick Pouyanné has previously said that the energy transition is likely to increase energy prices in the long term, although the group is now also bracing for a period of lower prices in liquefied natural gas as more supply comes online, especially from 2027 onwards.
That has added to Total’s incentive to buttress its earnings, with the company telling investors on Wednesday that it was confident it could “de-risk” its LNG activities and operate profitably.
TotalEnergies declined to comment on the copper trading plans.
Additional reporting by Sarah White
