2021 has been “frenetic” yet “fantastic” for Trafigura’s dry freight desk, according to its chief, who thinks the hectic, yet lucrative, trading conditions will continue next year too. Alan Cumming told TradeWinds that the inefficiencies that have been absorbing tonnage from bulker markets will continue to provide support in 2022. “I think that fleet inefficiency has been one of the big drivers but doesn’t seem to be resolving. So short term, at least, it looks like it’ll remain historically quite strong,” he said. “Further forwards, I think there’s a lot of change in regulations and emissions controls coming up, which is going to change the way that we trade.”

For Cumming, the biggest lesson from 2021 was: “Just be adaptable. Be ready to make change. And be ready to challenge your view every single day. It’s been a fantastic year in terms of earnings for the market. But it hasn’t been a year without its complications, with quarantines globally, crew changes and congestion particularly in China has been disruptive,” he said. “Probably the most challenging thing this year is that the traditional style of market analytics or fundamental analysis was a lot more difficult because of disruption due to Covid.”

Unlike in tankers, Trafigura does not own any vessels in its bulker fleet. The trader had an average between 50 to 55 bulkers on time-charter during 2021, peaking at about 80 vessels, Cumming said. Around three-quarters of the fleet are supramax bulkers and the rest are panamax. Cumming thinks the fleet will remain at around 50 or so vessels for the foreseeable future. Trafigura had about 40 and 45 bulkers on charter during 2020 on average. The trader has its own iron-ore export terminal at Porto Sudeste, Brazil, for which it books capesizes on a voyage basis.

Trafigura had a very bearish outlook for dry markets going into 2021 but changed up its strategy as soon as it saw that the upturn in earnings wouldn’t just be a flash in the pan, Cumming said. Cargo volumes were up, fixtures were up, and the trader increased its chartered-in fleet to handle the increased supply of cargo, he added. Cargo volumes rose to 41.6 MMT in the fiscal year that ended on 30 September, of which 63% was from internal Trafigura business. This is up from 37.4 MMT in the previous 12 months. Fixtures rose by nearly 9% to 1,226 over the and the dry-freight desk’s profit more than doubled. “There’s obviously been an energy crisis, so coal has made a comeback; the demand for coal has been strong,” Cumming said.

“In terms of our volumes, they’re up from what they were last year. Origins and destinations haven’t changed dramatically — Indonesia, Australia, Colombia and South Africa remain the big areas for us.” Trafigura has supplied more coal to China this past year and bigger volumes have come from suppliers in Canada, Indonesia, Russia, and South Africa, where the trader has commenced a strategic offtake agreement. Trafigura also expanded into new regions in 2021. “We added a new area that we hadn’t really been active in before, which was the Indian Ocean, where we started to operate a little bit more in the supramax space,” Cumming told TradeWinds. “The reason why we moved into it is it’s a swing basin between the Atlantic and the Pacific and gives us more visibility on the wider market.”

The firm in March hired Vivek Kumar, who worked previously for Norwegian operator Western Bulk, to head up the new Indian Ocean unit. The supramax-focused unit handles third-party cargoes of coal, cement, and the usual mix of bulk cargoes in the Indian Ocean. Until now, Trafigura’s supramax and ultramax bulkers have been focused on West Coast South America, in Chile, Peru and Mexico, serving big exporters and traders of mineral concentrates such as copper, zinc and lead.

Trafigura’s dry freight desk comprises 14 chartering staff, two more than last year, who were hired to handle increased demand and to help grow the firm’s third-party trading book. The firm is happy with the size of its dry desk for now and does not intend to grow it significantly, Cumming said. “The real focus is performance, whether we’re buying or selling freight, and making sure that we’re a reliable counterpart on both sides of that,” he added.