- Commodities -

.:A significant surge in growth in China, India and even Brazil
is playing a defining role in the development of commodity markets with the: 
  • development of infrastructures and industrial bases (construction materials, metallurgical ores, metals), energy consumption (thermal coal),
  • reduction of available farmland for growing populations (phosphates, fertilisers),
  • increase in food requirements and deformation of the raw agricultural materials trade because of population increase and dietary changes.

 

Locally produced commodities (high transport costs and possibility of local production): developing countries are new areas of investment for multinationals in competition with emerging local companies raising the issue of successful conditions for these markets and their development strategy:

  • Entry and competitive positioning, growth pre-emption/capture, development trajectory, expected profitability of related investments
  • Market consolidation, acquisition targets
  • Related questions: downstream integration (local distribution), strategic pricing, distribution

 

Traded commodities: disparities in the geographical distribution of raw material sources and the rise in demand result in an increase in trade flows (ores, fertilisers, cereals, etc.). In these cyclical markets, recently affected by the 2008 price hike then the 2009 crisis, companies are facing the difficult challenge of anticipating changes in worldwide supply/demand and securing new markets/prices. The main strategic issues are:

  • Development faced with the emergence of new players from developing countries and concentrated movements of multinationals
  • The role of leading firms in transforming markets: structuring supply, regulating supply/demand, downstream integration in trading/shipping,
  • Types of contract and power struggles in negotiations in the context of a changing trade structure; decrease in long-term bilateral contracts replaced by spot price or renegotiated trading with quarterly forecasts; speeding up market financialisation and the rise in trader power
  • Coverage

 

Examples of projects

  • Development strategy in growth countries for a cement works (general framework, regional studies and strategic investment due diligence for Brazil, China, West Africa, etc.)

  • Seaborne flow and price line projections for an international company in met and thermal coal markets
  • Vertical integration and investment strategy for a leading mining company in the fertiliser sector; regional growth strategies