Vitol Group signed its first multi-year financing deal for metals, as the energy trading giant ramps up its presence in the sector following a long stint out of the market.
The trading house entered a $240 million prepayment facility with a subsidiary of CIA Siderúrgica Nacional SA for the delivery of 6 million tons of iron ore over four years, Vitol said Monday in a statement.
Vitol, the biggest independent trader of oil, is building out its metals trading team, with hires from Glencore Plc and Mercuria Energy Group Ltd., as it focuses on copper, aluminum and iron ore. Last week it launched a financing joint venture targeting miners in the Americas.
“We look forward to expanding our presence in this important market and across the entire steelmaking value chain,” Derek Wilson, Vitol’s global head of steel raw materials, said in the statement.
Energy traders are using the bumper profits earned over the past few years to acquire assets and strike lucrative offtake deals for commodities. That’s shaking up metal markets where most traders lack the size to commit hundreds of millions of dollars in advance for cargoes.
Those deals are also a boon for producers and miners, particularly in iron ore, where prices have been declining due to the weakness of China’s construction industry.
(By Archie Hunter)
