Press Release | Commodity trading: resilience emerges amid geopolitical risks and a rigid regulatory environment

On December 5, 2024, at Hotel Splendide Royal in Lugano, the LCTA held the «Commodity Roundtable» alongside its Annual General Meeting. The event featured the participation of Swiss Ambassador Monika Schmutz Kirgöz as guest of honor, attracted over 120 participants from across Switzerland and highlighted the adaptability of commodity traders to escalating geopolitical risks and increasingly stringent regulatory frameworks.
In conjunction with its 14th Ordinary General Meeting, the Lugano Commodity Trading Association (LCTA) sought to assess the prevailing landscape amid another demanding year by convening a panel discussion with several members on a critical topic: geopolitical challenges and constraints on free trade.
The event opened with introductory remarks from LCTA President Matteo Somaini emphasizing that commodity traders continue to navigate unchartered waters following a year marked by increasing political intervention in market activities and unprecedented challenges for the sector. The baton was then handed over to the guest of honor, Swiss Ambassador Monika Schmutz Kirgöz. Currently head of mission in Rome and previously serving in Tel Aviv, Istanbul and Beirut, Ambassador Schmutz Kirgöz will assume leadership of the Middle East and North Africa Division of the Federal Department of Foreign Affairs (FDFA) starting January 2025. At the event, she conveyed her firsthand experience in the Middle East and emphasized the critical transitional phase the world is undergoing, characterized by a pivotal geopolitical shift towards a new multipolarity, coupled with the rise of artificial intelligence as a transformative force, with substantial implications for the business sector.
The remarks of Ambassador Schmutz Kirgöz contributed to prompt a panel discussion moderated by LCTA Vice President Roberto Grassi, featuring also Costanza Eufemi (Co-founder of Lyra Commodities SA), Mattia Giussani (Head of Power Origination of Sirius Energy SA) and Roger Hughes (COO and Risk Manager of DITH). The discussion addressed Europe’s decline in productivity and technology, its emergence as regulatory power, and the winners and losers of the sanctions war. Panelists recognized that while segments of the commodity trading sector have lost part of their business and were forced to seek alternative suppliers or customers, there have also been positive developments. Specifically, Europe’s concerted initiative to achieve energy independence through the diversification of energy sources and the promotion of renewable energy has benefited trading companies engaged in these areas, , or supporting the development of required infrastructures.
China’s growing global influence is also undeniable: the Asian powerhouse plays a pivotal role in the global supply chain of essential raw materials and it is also expanding its reach by strategically securing mines and resources in regions such as Africa and South America, often in exchange for building infrastructures or by integrating the entire value chain, from extraction to production, thereby gaining a competitive advantage over its competitors. Moreover, China has stakes in or oversees various vital ports around the world, including the Port of Piraeus in Greece, the Port of Gwadar in Pakistan, and the recently inaugurated Chancay port in Peru, just to name a few. The Chinese control of critical infrastructure is evidence of a farsighted and well coordinate strategic approach, although it raises concerns, since it may serve as a mechanism for geopolitical leverage.
Overall, the panel examined how the interplay between deglobalization and trade protectionism affects business decisions and investments patterns, leading to redundancies within supply chains to bolster corporate resilience and ensure operational continuity. Despite the objective challenges, a positive picture of commodity trading companies that are adaptable and flexible in rapidly evolving markets, customer-centric, and innovative in problem-solving in areas such as logistics and risk management, has arisen from the discussion. A discussion that culminated with a cherry on top. Although the topic was not explicitly discussed, the response to a legitimate yet provocative question from the audience was unequivocal: Ticino, and Switzerland more broadly, maintain favorable framework conditions and as long as the regulatory framework remains business friendly, they remain the preferred locations for commodity traders to conduct business.
Lugano, December 6, 2024
For further information: Monica Zurfluh, Secretary General, LCTA, zurfluh@lcta.ch, M +41 79 220 40 71