The start of the year was a strong one for the Glencore trading division, with higher prices for key commodities amid an improved global economic outlook. The Swiss company, which is also a major mining company, said its marketing division would be in the upper end of its projected $ 2.2 billion to $ 3.2 billion in annual revenue.
Commodities – from copper to coal – rose on strong demand from China and elsewhere as the global economy emerged from the pandemic.
Copper, which is used in a variety of goods – from home appliances to electric vehicles – traded in the region of $ 10,000 a tonne on Wednesday, continuing to rise steadily from the lows set in March 2020 due to the Covid-19 outbreak. The metal traded less than $ 200 below the previous record reached in 2011 during the commodity boom.
Copper prices averaged $ 8,501 in the three months to March, up 51% year-over-year, while zinc rose 29% and nickel 38%, according to Glencore’s quarterly production report. and thermal coal – by 27%.
RBC analyst Tyler Brod said the positive momentum for Glencore’s trading division will continue for some time due to supply disruptions in key commodity producing countries such as Chile. The Trading Division is helping Glencore stabilize more volatile mining asset revenues. Investors are watching it closely as it can generate good returns. It is also an important part of Glencore’s dividend policy.
The division achieved one of the best results in history last year, with earnings before interest and taxes of $ 3.3 billion as traders capitalized on the turmoil caused by the coronavirus in the oil and metals markets. Glencore recently announced that the performance of its mining assets in the first quarter of 2021 is in line with expectations.
Glencore CEO Ivan Glasenberg is set to step down in June. He will be succeeded by Gary Nagle, head of the company’s coal division.
Some trustees and investors have criticized Nagle’s compensation package. However, chairman of the board of directors Tony Hayward said he expects broad support for the package at the annual meeting in Switzerland.