COMMODITY
TRADING

Along with London and Singapore, Switzerland nowadays plays an essential role in the commodity trading sector worldwide. Historically, since the first decades of the twentieth century, goods such as cotton, coffee and wheat have long been negotiated through Switzerland. Successively, the contingencies of the world wars, Switzerland’s neutrality, a flexible exchange rate as well as the country’s political and economical stability have favoured the settlement of this intermediary business: suffice to mention the characteristics of the Cold War, the Egyptian cotton in the sixties, the oil crisis in ’73-’74, the developments in post-Soviet Russia and so forth. All of these factors, added to a variety of typically Swiss particularities – such as moderate taxation – have fostered Switzerland as a particularly attractive location for commodity trading and its development.

As for the situation in our country, it is a well-known fact that in the past decades, Geneva has made great efforts in this branch so that today, almost 400 companies are situated in the Lake Geneva area with a total turnover estimated at 800 billion francs and direct employment figures of over 6’000 persons. Furthermore, the goods traded are many: soft commodities (cereals, sugar, coffee, cotton), oil, steel and others.

ALONG WITH LONDON AND SINGAPORE, SWITZERLAND NOWADAYS PLAYS AN ESSENTIAL ROLE IN THE COMMODITY TRADING SECTOR WORLDWIDE.

LUGANO
AND COMMODITY TRADING

In this specific context, Lugano also achieved an essential role – especially as regards steel, base metals, carbon and in part, also soft commodities.

Approximately 90 companies make up commodity trading in Lugano, with important tax revenues flowing to the Canton Ticino and an increasing contribution to cantonal GDP (about 2%) in line with the Swiss trend. 1’500 highly qualified persons are directly or indirectly employed in this branch, with quite specific skills: shipping, transportation, financing of operations, risk insurance, legal aspects, foreign language skills and so forth.

Several factors fostered commodity trading’s development in Ticino. The essential aspects are:

  • Political and economical stability in a neutral country greatly dominated by a long tradition of international diplomatic ties;
  • A judiciary system based on the principle of legal certainty and on a liberal ideology, which greatly limits the government’s interference;
  • Particularly efficient transportation and communication facilities;
  • A traditionally solid banking system of universal as well as specialized banks, serving the specific requests of the trading business;
  • Interesting fiscal conditions for new enterprises as well as for long-existing companies. These trading companies are generally treated as auxiliary companies and could therefore benefit from favorable taxation due to the preponderance of overseas to overseas activities;
  • High-quality and flexible education thanks to the University in Lugano and to the specific training programs offered by various professional/sector association.
  • A favorable geographical position on the North-South axis across Europe. Lugano is relatively close to Milan, Geneva and Zurich. The proximity to the North-Italian industrial sector as well as the cultural and linguistic affinities contributed to the settlement of trading companies specialized in supplying raw material to the Italian industry.
  • Due to the cultural and linguistic kinship to Italy as well as the fluency in English, German and French, many companies from different origins are located in Ticino (Italian, Arab, Turkish, Russian, German, American, etc.).
  • A favorable time zone location enabling to operate all over the world during the working hours.

THE COMMODITY TRADER

A trader is an intermediary with an important role in the value chain, which begins with the supplier of commodities and ends with the consumer of the produced goods. The commodity trader usually buys goods from the producer and attempt to sell them to the processing companies, to other intermediaries or directly to the consumers; the trader will strive to achieve the highest possible gain and to guarantee the chain’s efficiency. In other words, the trader assists in matching demand and supply, often situated in different parts of the world, offering both supplier and client – at all levels of the value chain – a number of additional services, which require specific skills. Therefore, those active in the value chain can concentrate their resources and activities on their core business, while the trader takes care of selling the goods thanks to his/her knowledge of the market, transportation, logistics, accreditation and financing of these operations.

LCTA EXECUTIVE BOARD