Trafigura in talks with China’s ITG to set up credit fund
Commodity trading house Trafigura Group is in talks with Chinese supply chain conglomerate Xiamen ITG Group to form a joint venture to trade raw materials and finance commodity deals, according to people familiar with the matter.
The venture is being set up at a time when competition is heating up among traders for lucrative financing deals with commodity producers, with margins from simply buying, transporting and selling resources like oil, gas and metals expected to tighten.
Trafigura is facing competition as a dominant player in metal markets from other big energy traders offering cash in exchange for ores and refined metal. Meanwhile, Chinese domestic traders are also seeking opportunities to expand overseas as competition at home intensifies.
Over the past year, Mercuria Energy Group has been rapidly growing its trading book, underwriting more than $3.5 billion in financing for metals flows under Trafigura’s former metals co-head Kostas Bintas.
Partnering with a Chinese state-owned firm could provide Trafigura, one of the world’s top traders and a major borrower, with additional and competitive access to funds, the people said, asking not to be named because the discussions are private. For ITG the deal would help expand its global network, they added.
Since 2022, Trafigura has been diversifying its funding base through deals with national export credit agencies in Europe, Saudi Arabia and the US.
A spokesperson for Trafigura declined to comment. ITG did not respond to a request for comment.
ITG is the largest of a trio of state-owned raw materials and logistics conglomerates from the Chinese coastal city of Xiamen that have expanded rapidly into natural resources in recent years.
These Xiamen-based firms, owned by the city’s government, differ from both their closest Western competitors and Chinese central-government owned conglomerates. They are more diversified, spanning the supply chain from production to trading to property, placing them closer to Japan’s trading houses.
(By Archie Hunter, Alfred Cang and Julian Luk)
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