In a striking pivot, French energy titan TotalEnergies is meticulously exploring the prospect of delving into copper trading. This strategic consideration might herald a transformative expansion of its already expansive oil trading operations into the metal realm—an endeavor aimed at harnessing the burgeoning momentum of the energy transition.
Rahim Azouni, the senior vice-president charged with overseeing crude, fuel, and derivatives trading, made waves at a discreet assembly in London. Attendees reported that Azouni asserted the company has been "studying the case" for initiating copper trades. He pointed to the sweeping energy transition as the driving force behind this exploration, yet he emphasized that a definitive decision has yet to be reached, as shared by sources privy to his remarks.
TotalEnergies maintains a formidable trading division focused on oil products, gas, power, and innovative fuels, although specifics regarding the scale of these operations remain under wraps. His commentary arrives amidst a larger trend, where a wave of oil traders is venturing into the metals market, eager to capitalize on the soaring demand for copper—a fundamental ingredient in electricity infrastructure, construction, and the ever-expanding electric vehicle industry. The push toward cleaner energy alternatives is simultaneously elevating the appetite for aluminum and nickel as well.
Despite projections that global copper demand may skyrocket over the next decade, this year has been lackluster for the oil sector. China’s waning appetite for fossil fuels has kept prices subdued, even amidst geopolitical turmoil in the Middle East. Consequently, traders, who once amassed wealth through oil trading—especially during the price volatility triggered by Russia’s invasion of Ukraine in 2022—are now increasingly eyeing metals as a new frontier for profit.
Indeed, consider Vitol, the world’s preeminent independent oil trader, which has recently tiptoed back into the metals arena—a market it abandoned back in 2014. This year, Vitol snatched two aluminum traders from a competing entity and is honing in on aluminum as a critical component of its energy transition roadmap.
Furthermore, Geneva-based Mercuria is aggressively expanding its presence in metals, assembling a robust trading unit of 60 professionals under the stewardship of Kostas Bintas, the former co-head of metals at rival Trafigura. Even prominent hedge fund manager Pierre Andurand, celebrated as one of the foremost energy traders globally, is recalibrating his focus toward copper and other metals. Earlier this year, he boldly predicted that the price of copper could skyrocket to an astonishing $40,000 per tonne—an unprecedented quadrupling of its current valuation.
Amidst this backdrop, Tom Price, a resources analyst from Panmure Liberum, underscores that the downward trajectory in oil market volatility and the long-term shifts in energy paradigms are catalyzing this migration to metals. "They recognize the oil market is likely on a downward trend," Price elucidates, "and they’re strategizing to mitigate risk by venturing into the metals sphere." He warns, however, that the transition might not come easily for firms traditionally rooted in oil trading. "These markets don’t operate on the same principles as oil," he reflects. "In theory, they can make the switch, but the practicalities pose significant challenges."
In previous statements, TotalEnergies’ Chief Executive Patrick Pouyanné has articulated his belief that the energy transition is poised to elevate energy prices over the long term, albeit the company is also bracing for a spell of lower prices in liquefied natural gas as new supplies inundate the market, particularly post-2027. This dynamic adds layers of urgency for Total to secure its earnings stream, with the firm recently expressing confidence in its ability to "de-risk" its LNG ventures while ensuring profitability.
As for the burgeoning copper trading strategy, TotalEnergies has chosen to remain reticent.
Additional reporting by Sarah White.