Quote (Malopox @ Apr 7 2023 02:10am)
I have it a bit easier in my line of work. I deal with physical commodities which have historically been directly linked to geopolitics. Majority of people I meet speak Russian/English/French/Chinese/Dutch/Spanish/Arabic (often a combination of 3-4 of those). Some have spent years in Russia in local trading offices etc and are acutely aware how the pie is made.
Overall I see a tectonic split in my line of work between reality (within allowed sanctions regime) and public messages in the media which seem to be bordering on religion and fanatism. As a bank you are the most exposed so usually you can’t take any chances even if allowed by the regulations. Clients are actually complaining they are pushed by the OFAC to continue buying Russian commodities to ensure security of supply. I see European banks losing out the most as Americans are reassured by OFAC, Asians/ME banks not giving too much of a shit, but EU ones are under constant pressure by the ESG brigade.
https://www.ctrmcenter.com/news/trafigura-vitol-might-step-up-trade-in-russian-oil-ceos/As a result I see that crude trading offices have largely moved to Dubai and stuff is sold to India/Africa/China settled in gold/dirham/rupee. Oil products are still allowed to be lifted and encouraged to keep flowing by the Americans. EU have allowed blending explicitly so russian origin is still flowing, albeit for “statistics” it doesn’t show up as “Russian”. There is an industry wide joke about
Latvian and Malaysian blends.
Metals are too important for energy transition efforts to be sanctioned (Russian origin copper/nickel/alu represent 25%+ of LME onwarrant material. We see stuff coming offwarrant which has been produced after feb 2022 which always causes a long discussion with banks). Sanctioning metals will probably collapse hedging/trade in metals and will cause another inflation spiral.
Agri has not been sanctioned by the west and Russians are actually regaining control by kicking ABCDs out (except COFCO lol cuz they are bros).
I see that environmental concerns have been thrown under the bus as shipping routes have on average doubled or tripled in time which burns more fuel oil and many of those ships are old which will mean an increase in incidents. Every rusty bucket that is able to float is being chartered to carry stuff to those desperate enough to buy.
Yeah commodities is a really interesting space. We probably both agree that Russia is an extremely important supplier and there's a real disconnect today with people understanding this and wanting to accept it.
I genuinely think that European industry, particularly German industry will see significant de-industrialization. It makes sense to make widgets and have jobs in central Europe when you can source cheap energy, it doesn't make that much sense when your costs systemically have gone up and will stay up because now you have to source energy from much farther.
From your line of work, do you think western companies are eager to go back to how things were, meaning continuing heavy Russian commodity imports or is there a mood that things are never going back?