What's going on?

At least Trafigura�s seeing the bright side of all this supply chain chaos: the commodity trading firm reported a record annual profit on Wednesday.

What does this mean?

This year�s supply disruptions have panned out well for Trafigura: the company � which makes its money by selling and shipping metals, oil, and other commodities around the world � has seen booming demand as countries scramble to get their economies back on track. That�s meant Trafigura has been benefiting from both higher prices and an uptick in orders, trading 25% more oil and 8% more metals between October 2020 and September 2021 than the same time the year before. But here�s the really important bit: the company doubled its profit over the same period to hit a new annual record.

Why should I care?

The bigger picture: Arbitrage, Trafigura style.
Trafigura�s done well from rising prices and rising demand, for sure, but there�s a slightly more nuanced reason it�s done so well. See, supply and demand isn�t a constant across the world at the best of times, let alone in a pandemic. That means commodity prices have varied wildly from region to region depending on how in need it is, which has allowed Trafigura to capitalize by, say, buying a cheap shipment of aluminum on one side of the world and selling it for an arm and a leg on the other.

Zooming out: It�s about to get even chillier.
Europe�s having a bit of a commodity crisis right now: Germany and France�s energy prices for 2022 � which are tracked on the futures market � rose by 15% and 14% respectively on Wednesday. That�s partly because freezing temperatures have pushed up demand among frosty-fingered home-workers, which has forced the country�s providers to burn through their scarce gas, coal, and oil stores to keep up. And given that the weather�s so inclement at this time of year, they can�t exactly rely on renewable sources to make up the shortfall either�