TotalEnergies Mulls Copper Market To Expand Trading Operations

TotalEnergies is currently exploring the possibility of entering the copper trading market, a move that would mark its first venture into metals trading and complement its extensive oil trading operations as part of the global energy transition.

Speaking at a private conference in London, Senior Vice President of Crude, Fuel, and Derivatives Trading at TotalEnergies, Rahim Azouni, confirmed that the company is studying the case for copper trading.

According to the Financial Times report, while no final decision has been made, Azouni indicated that the growing focus on the energy transition is driving the company’s consideration of this market opportunity.

TotalEnergies, which already manages a substantial trading division encompassing oil products, natural gas, power, and new energy sources, has not publicly disclosed the scale of its trading activities.

Azouni’s remarks follow a trend where several oil trading firms are diversifying into metals, recognizing the rising global demand for copper, which plays a critical role in infrastructure such as electrical wiring, construction, and electric vehicles.

The transition to cleaner energy is also increasing demand for other metals, including 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.

Resources Analyst at Panmure Liberum, Tom Price 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.