Commodities are bound up in all the pressing issues of our day, from energy security in Europe and the metals and minerals required for the energy transition to the impact of climate change on agricultural commodities.
The unprecedented importance of commodities has left companies trading in or reliant on commodities wondering how to address mounting challenges: How do you prosper in increasingly turbulent markets? How do you get the most out of potentially game-changing technology? How do you get your finance, risk and ESG teams up to speed to deal with these issues?
Addressing a business that tends to keep its cards close to its chest, PwC’s Global Commodity Trading Survey provides insights into these challenges and how the industry is responding, covering more than 70 companies and traders across the globe.
Our findings Strategic environment
In the survey we asked what external and internal factors companies will be making their main priorities over the next five years.
External priorities
Internal priorities
Our findings Risk management operating model and reporting
The survey results highlight the ongoing transformation within the risk function, the cornerstone of any trading company. There is a clear drive to enhance strategic engagement, improve market risk capabilities and transition towards more advanced technological solutions as the risks involved in a transaction extend beyond market risk to include credit, liquidity, operational and other factors.
While centralised models and in-house systems continue to dominate at major trading houses, the increasing reliance on derivatives—futures, swaps and options—highlights the industry’s focus on mitigating risk effectively no matter the size of the company.
As risk teams evolve, their role in shaping business decisions will become increasingly critical to ensuring both operational stability and competitive advantage. This will be achievable only if the risk team is supported by the appropriate system and the right people.
Our findings Finance’s new vision: evolving into a business partner
The survey responses reveal that the finance function, like the risk function, is shifting its traditional focus. Finance is becoming a true partner able to provide advice that supports business growth.
This involves a strategic shift towards enhancing operational efficiency, leveraging data-driven insights and driving informed decision-making.
As trading companies and commodity-intensive corporates navigate the evolving strategic environment, the focus on timely reporting, management insights and continuous improvement remains key to achieving the vision of a more efficient and effective finance function.
Our findings Evolution of technology
The commodities industry increasingly faces scrutiny regarding transparency and the need for robust operational effectiveness. The survey shows that companies are transitioning from on-premises applications to cloud-based solutions.
Cloud adoption strategy: Commodity traders and commodity-intensive corporates are focusing on adopting industry cloud solutions because they offer enhanced data security.
Adoption of GenAI: The survey points to significant interest in GenAI tools, although potential use cases vary and few companies have so far implemented them.
Tools for process automation and data analytics: Energy traders are on top of the GenAI adoption wave thanks to a very liquid market, with a lot of data available to all the players and more standardised contracts and pricing mechanisms.
Our findings Evolution of sustainable business and ESG
For most companies, the evolution towards more sustainable business is a journey that creates challenges but also significant opportunities. The respondents to the survey indicate a similar two-sided mindset. The findings also show the leadership that this industry provides with its pivotal role between upstream and downstream supply chains.
Download the full report
https://pages.pwc.ch/view-form?id=701Vl00000igYOwIAM&embed=true&lang=en
