Trafigura is one of the world's largest traders of non-ferrous concentrates and refined metals and bulk minerals. Despite the challenging global conditions experienced throughout 2020, the division had one of its most profitable years on record.

Market overview

The global non-ferrous market in 2020 was dominated and defined by the impact of COVID-19. Put simply, it came down to a trade-off between both primary and secondary supply disruptions and demand destruction. The supply and demand for each metal was largely determined by geography. For instance, due to mine disruption in South America, copper and, to a lesser extent, zinc faced greater losses in production than in consumption, as demand was more resilient than for other metals. Aluminium, on the other hand, faced only minor supply disruptions, almost exclusively in the scrap market, but suffered a collapse in demand owing to its larger exposure to the automotive and aerospace sectors.

Looking ahead to 2021, while the general expectation is that COVID-19 disruptions will be significantly less, other risks to supply, such as industrial action, remain very real.

Crucial in defining the future supply-demand profile of each metal will be the extent of governmental economic stimulus packages focused on infrastructure and the electric vehicle revolution. Although COVID-19 has materially impacted near-term balances of non-ferrous metals, the outlook from 2025 onwards is bullish for the whole sector.

Trafigura performance

During 2020, the Non-ferrous Metals and Minerals department recorded its most successful performance.

It was also the first full year after restructuring the department into four books: copper; zinc and lead; nickel and cobalt; and aluminium – in each case handling both refined metals and concentrates. Merging refined metals and concentrates trading, which had previously been managed separately, proved successful, enabling the four book heads to define clear and consistent strategies for each metal and to extract more value from the interplay between concentrates and metal.

Maintaining a consistent presence in all markets contributed to strong performance, particularly our large presence in the China domestic market. Combined with a renewed commitment to research and analysis, this restructure has placed us in a unique position to anticipate key market trends.

During the year, we saw past investments and strategic decisions bear fruit, notably making continued strides in improving our internal systems for operational control. Trafigura's proprietary 'Titan' trading platform provides an advanced system of checks and controls, monitoring every link in our global operations chain. Our systems also helped to facilitate the successful integration of Nyrstar.

The year also saw the establishment of a non-ferrous metals business development unit, which integrated well with the trading books and added significant value in deal origination. Our colleagues in Structured and Corporate Finance and Treasury surpassed themselves in growing our ability to provide financing solutions to support our customers, counterparties and stakeholders. This, together with our financial strength and liquidity, means we are well positioned to take advantage of new market opportunities in the coming year.

The most important component, as always, is the support from our customers, clients, suppliers and stakeholders. They recognise that our revenues are produced not at the expense of counterparties but from managing and optimising large flows in markets and geographies through long-term relationships that have been developed over the past 25 years. We are optimistic that we build on the success of this year in 2021 and we expect to see continued progress from the Metals and Minerals department.

Non-ferrous concentrates and refined metals traded (mmt)
Non-ferrous metal concentrates
Non-ferrous refined metals


Like many other globally traded commodities, copper experienced significant demand destruction in 2020, but this was coupled with significant disruption on the supply side, notably in terms of scrap supply and primary production in Latin America. Once demand returned after the initial shock, a tight supply-demand balance became evident in the latter part of the year, supported by copper-friendly government economic stimulus policies. As a result, prices quickly rallied in May in what became a V-shaped recovery.

Trafigura’s newly integrated copper desk, with trading of concentrates, refined metal and derivatives united in one department, had an exceptional year, growing volumes and market share and recording a substantial profit. Integration created an enhanced dialogue between individual teams, better understanding of the constantly changing environment and an improved capacity to service customers and seize trading opportunities. The trading of ancillary metals, by-products of our copper concentrates business, was also a beneficiary of the integration and experienced growth throughout the year.

Such benefits helped us overcome the challenges of working remotely for several months. They also enabled us to support our customers in challenging market conditions, in the process building market share and securing long-term flows. We put in place many financing deals to support our customers in the early stages of the pandemic when copper prices were weak, creating longterm commercial relationships with producers of copper and gold that will contribute to the book’s forward flows. The end result was substantial new business that is noteworthy given the maturity of our presence in the copper market.

Looking forward, we see a bright future for copper as a result of growing demand for electricity and government policies aimed at economic recovery and combatting climate change. The latter include incentives for the purchase of electric vehicles and Europe’s Green Deal support package for clean energy. Global investment in power grids is also increasing – a trend we expect to continue in the future. This will likely result in a significant copper supply gap that will drive prices higher to incentivise new production. We believe our integrated team will be well positioned to trade in this market and effectively service our growing customer base.

Zinc and lead (refined and concentrates)

In zinc concentrates, the global market swung from surplus supply in 2019 to a deficit, while the lead concentrates market had a more balanced position in 2020.

The COVID-19 pandemic, from February, significantly constrained mine and transport capacity globally, in particular in Latin America, reducing global mine production by 8-12 percent. This in turn led to a market deficit for zinc concentrates and a more balanced-to-tight market for lead concentrates, as evidenced by the fall in treatment charges from January/February to September.

As the world adapts to the COVID-19 pandemic, mine disruptions are expected to significantly reduce with the global market returning to a more stable trajectory of mine supply.

On the refined metal demand side, lockdowns across the globe, with varying timelines and severities, resulted in supply bottlenecks and demand destruction across all sectors and regions, causing significant disruptions for both the zinc and lead markets.

In terms of supply, constraints in the lead scrap supply chain resulted in losses of lead metal output, with a number of secondary smelters closing for a period of time. In zinc, while metal production disruptions were limited, especially compared to mine disruptions, demand was heavily impacted and particularly hard-hit by weakness in the automotive sector. As a consequence, both lead and zinc metal markets experienced sizable surpluses, with exchange stocks increasing throughout the second quarter of 2020.

Since June, there has been a significant rebound in demand for both metals, primarily led by China, with a strong recovery across most sectors in the third quarter.

Europe has also recovered well and we see continued pickup across all markets into the fourth quarter. We remain positive about demand for both metals on a forward-looking basis, with continued support from both construction and automotive industries through 2021 and beyond.

From the performance point of view, the lead and zinc trading desks were well positioned to adapt to this market change. Looking forward, we will continue to focus on developing strong customer relationships and keep consolidating the synergies between the global trading book, mining assets and the Nyrstar smelting business.

Alumina and aluminium

The COVID-19 pandemic led to severe demand destruction for aluminium across the world as the automotive and aerospace industries that account for a large share of consumption suffered disproportionately from the economic shock. One bright spot was the packaging market, as sales of pharmaceutical products and beverage cans thrived. Demand improved in China in the second half of the financial year but remained weak elsewhere, causing the Chinese import arbitrage for aluminium metal to open for the first time in several years. Aluminium supply remained largely uninterrupted by the crisis, which caused a large global surplus of metal. However, aluminium prices recovered from lows reached in the second quarter with strong capital inflow from investors seeking an inflation hedge.

Meanwhile, the alumina market has remained stable over the course of the pandemic. Alumina prices returned to lower more long-term average prices and production capacity resumed more normal levels following the supply problems of 2018-2019.

Overall, Trafigura’s trading volumes increased again this year and we were able to further strengthen our position as the largest global independent alumina and aluminium trader. The team’s customer-centric approach forged further long-term customer relationships which significantly enhanced our trading volumes.

The outlook for 2021 is very much framed by the recovery from the virus. Demand is expected to return slowly to pre-pandemic levels. Despite this, higher aluminium prices mean supply growth will continue. This disconnect between strong futures markets and weak fundamentals will fuel the growing supply overhang. We believe we can continue this year’s growth by further building sales that add value to our customers and by supporting our supply sources in a difficult market environment.

Decarbonisation of the industry is becoming a vital issue for the aluminium market. Many customers in the automotive, construction and packaging sectors are increasingly focused on delivering sustainable and low-carbon products to their consumers. In 2020, we became the first commodity trading company to establish a low-carbon aluminium trading desk and a low-carbon aluminium financing platform of up to USD500 million. Natixis and Rabobank supported Trafigura in the design and structuring of this innovative instrument. Our future objectives are to secure long-term low-carbon aluminium supply for our customers, to support the efforts of our business partners as they invest in decarbonisation and ultimately to create efficient linkages between suppliers and end-users.


Nickel demand held up well in 2020 despite COVID-19, marginally contracting by 2.4 percent. Record high stainless steel consumption in China in the second half of 2020, as well as the growing requirement for nickel in batteries, have partially offset a sharp demand drop in other sectors and regions. At the same time, global nickel supply continued to rise as a result of a significant increase of nickel pig-iron (NPI) production in Indonesia, which exceeded the supply cuts in the rest of the world, tipping the market into a surplus.

Trafigura’s nickel team helped counterparties maintain their operations during the crisis by expanding the range of services we offer them in order to counteract extremely volatile demand. We also maintained our strong position across all regions while significantly increasing our nickel concentrates volumes through long-term offtake agreements. We increased trading in NPI out of Indonesia and nickel sulphate in China and the rest of Asia, and traded record volumes in India.

Looking ahead, we maintain a positive outlook on the metal fundamentals, particularly owing to the growing electrification of transport as a result of green stimulus policies being implemented around the world. While we expect small surpluses in the next two years due to a continued increase of NPI production in Indonesia, the growing uptake of nickel for electric vehicles will still require additional high-grade supply from new projects in the longer term, which in most cases require prices substantially above the current levels to become economically feasible.


Cobalt market fundamentals remained robust throughout 2020, as COVID-related supply disruptions outweighed the negative impact of the pandemic on metal consumption. In 2020, we saw a continued drop in artisanal supply from the Democratic Republic of the Congo (DRC) as well as pandemic-related supply cuts from nickel operations producing cobalt as a by-product. In addition to the growing demand for EV batteries, cobalt consumption was supported by the shift to 5G that continues to gain pace in China and the subsequent increase in average cobalt loadings in smartphone batteries, which negates the impact of the recent drop in phone sales.

Trafigura continued to support its trading partners over the course of the year. The impact of COVID-19 on producers, particularly in the DRC, resulted in significant operational disruption and reduction in volumes. That disruption extended to the Mutoshi Pilot Project – an artisanal small-scale mining formalisation project in the DRC operated by concession holder Chemaf and supported by the NGO Pact and Trafigura. Owing to risks related to COVID-19, the project was suspended in March.

Over the course of the year, Trafigura maintained its market share by trading steady volumes of cobalt hydroxide and continuing to service its customers in spite of supply and logistics interruptions, while maintaining a strong commitment to the enhancement of responsible sourcing standards for cobalt. The company has played an active role in industry forums on such matters and has continued to support the World Economic Forum’s Global Battery Alliance (GBA) – both financially and via Trafigura’s participation on the GBA’s Executive Board and Steering Committee.

In 2021, we expect the cobalt deficit to widen, as demand trends continue to gain momentum, indicating a need for additional supply.

Amin Zahir

Head of Metals and Minerals

2020 Annual Report
2020 Annual Report

2020 Annual Report

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