Banking & Financial Services Salary Guides
Commodities sales & trading: 2020 trends and salaries
almost 4 years ago by Lenny Madriaga / Back to all blogs
An Ethos BeathChapman Banking and Financial Services perspective on what hiring managers and talent should know in today's market.
By: Ethos BeathChapman's Banking & Financial Services practice
2019 IN REVIEW
Looking back at 2019, it would be fair to say it had been a highly eventful year. From the ongoing trade war with US and China, to the impending 2020 low sulphur legislation on fuel oil, some of the worst political unrest and tensions in Hong Kong, market dynamics moving from a pure trading route to trading around more of an asset based portfolio – it’s not difficult to see why 2019 had been a challenging year to navigate. With a number of the top trading firms still reporting sizeable profits and with the imminent largest IPO in history from Saudi Aramco on the horizons, how can we make sense of what is happening? From a recruitment stand point, what are the hot areas in the market for hiring in the commodities space right now and where will this war on talent be fought?
Physical trading: the end of an era?
It is not an uncommon thought in today’s market that traders are finding it increasingly difficult to access margin along the supply chain. Due to high levels of transparency now in the markets and a more globally connected economy, the old-world order of physical trading has become increasingly challenging – which is why traders in the markets seem to favour access to production with a steady flow of supply or being able to provide value for their customers on the downstream side.
Demand for quantitative analytics and data science
The other side of where the market has moved is where businesses are now increasingly more aware of the role of technology. With the advent and now functional use of big data and machine learning, there has a been a huge demand for trading companies to hire PhD graduates with a background in quantitative analytics or data scientists into their teams in order to make sense of all this information that’s available – driving both efficiency and productivity and illuminating areas of businesses which were once unknown, and an attempt to predict where the market moves – in turn, affecting bottom line. We have seen this across all domains, including shipping, energy and petroleum, agriculture, metals, hedge funds and propriety trading firms.
In Nov 2019, DBS and Trafigura had announced their initiative to tap into this new age of data sharing and transactions by working on their own trade cloud platform.
On the commodities bandwagon
With this change in market dynamics, there had been a noticeable uptick in fintech companies entering this space. Companies like Kpler, Tradecloud and even some of the data consultancy services firms like Refinitev and IHS have all invested heavily to try and tap into the new wave by offering their own platforms and systems in which commodity and trading platforms can either streamline modes of working or be able to access more value in points of the supply chain.
2020 TRENDS AND OUTLOOK
In-demand skills and experience
To this end, we have seen increased hiring coming from technology companies to cover the commodities market, seeking experienced executives in CTRM / ETRM, data science, java development, as well as experience with artificial intelligence, big data, and machine learning.
Quantitative candidates remain hugely valuable in today’s risk market too. From the most technical and expansive areas of the market, – model building and model system designers as well as those talent whom can use R, Python, MATLAB, to more model risk validators and risk analytics, compliance and governance are held in some degree in such high regard.
Asia: the epicentre of growth
The commodities industry over the years has always been susceptible to ups and downs, with a number of different factors affecting this fluctuation - from macro-economic factors, the effects of a global economic slowdown, oversupply in the market, disruptions in the global supply chains. There does seem to be a resounding common theme however, which is certainly more prevalent coming out of Asia than the rest of the world. Asia is where the growth is. As represented in McKinsey and Company’s recent insights on the topic, they found that the continent is on track to top 50% of global GDP by 2040 and drive 40% of the world’s consumption, representing a real shift in the world’s centre of gravity.
With this in mind, and amongst other reasons including the ease of doing business, robust safety laws and strong judicial governance, Singapore has been a prime location for international and global commodity firms setting up their main regional offices here.
Evolution of the commodities industry
There has been an adjustment in the market though, and certainly a consolidation – from the time when everyone wanted to be a part of the commodities boom, a time of high prices where many big banks still had appetite for a piece of the action. In today’s market however, this does not seem to reflect that sentiment, with a number of high-profile banks pulling out and choosing to focus on their traditional and core businesses of private banking and wealth management, transaction and investment banking and project finance.
Overall though, the commodities market still represents an important and desirable market to be involved in. Yes, there may be more transparency now and with increased liquidity and shifting demand. As a reaction to these changes, traders naturally respond either by diversifying their portfolio into other products which might be a little more obscure and perhaps unlock more revenues, or by becoming even more acutely aware of how to trade. For example, the emergence and higher demand for electric vehicles the likes of Tesla has spurred an increase in the demand and supply of rare earth minerals like lithium and cobalt, to which these batteries hugely depend.
Alternative energy sources
Increased pressure on G20 economies to cut global fuel emissions in bid to fight climate change has shone the spotlight on alternative energy options such as renewables, like solar and wind. There is also much more activity now in liquefied natural gas (LNG) as a better and more viable alternative to petroleum, being much cheaper and cleaner energy fuel source.
We expect these hiring trends across producers, traders, refiners and some financial institutions coming from securities or prop trading firms to continue in 2020.
It's clear that the market is changing.
Today's traders, and commodities sales and marketing executives must be nimble, inquisitive, confident, acutely aware of the role of technology, possess strong risk management and governance skills, while bridging all of these in forging strong relationships.
In this candidate-short market, our Commodities sales and trading hiring trends and salary report provides guidance to:
Hiring managers, on winning stellar talent and paying them right.
Talent, on setting yourself apart from your peers in commodities.
If you are hiring across Asia, an interested professional, or someone keen to discuss the evolving commodities landscape, feel free to contact Ethos BeathChapman.
Search for jobs in Asia's commodities industry.
In this 3 Questions series, Ethos BeathChapman (EBC) consultants offer a snapshot of the latest in their industries and advice for the executive recruitment market.
Today's spotlight: Commodities.
Responding to these questions is EBC's Lenny Madriaga, who leads searches for the world's most recognised trading houses, listed metals and mining companies and boutique hedge funds.
If you have more questions on the commodities recruitment market, contact Ethos BeathChapman.
About Ethos BeathChapman, EBC:
We are a global group of executive recruitment experts in Australia, Asia and EMEA, with a network beyond. We connect exceptional people to exceptional companies. Established 2005 in Sydney, our multidisciplinary expertise covers corporate and specialised functions across Banking and Financial Services, Fintech, Technology, Legal, Risk, Compliance, Healthcare, and Consumer recruitment markets, among others. For more information: www.ethosbc.com
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