After a period of exceptional profits, commodity trading markets are starting to normalize, causing industry-wide margins to stagnate or even recede. Our research shows commodity traders generated more than $100 billion EBIT in 2023, and 2024 earnings indicate industry value pools decreased by more than 30 percent year over year, with 2025 shaping up to look much the same.
During the boom years of 2022 and 2023, higher volatility spurred a dramatic increase in industry margins. This attracted a number of new entrants in commodity trading and motivated many incumbents to grow their existing trading capabilities. As margins compressed in 2024, traders faced increased pressure and higher competition. Despite these recent developments, longer-term trends show trading value pools continuing to grow steadily through the end of the decade.
A successful response to this new, leaner environment likely requires the embrace of new tools and revised operating models, both of which can help traders better quantify and manage price exposure and other key risks. This article examines the state of the industry across a number of core commodities and subsequently explores how industry players can best position themselves to capture the next S-curve in commodity trading.
Taking stock of the commodity trading industry
In 2024, commodity trading demonstrated remarkable resilience, with most prices trending downward and many pandemic-era supply chain disruptions successfully mitigated. Broadly speaking, price volatility also decreased, with 2024 presenting a more nuanced market environment. The continuing long-term growth trend of commodity trading value pools under a business-as-usual scenario shows a trajectory that could reach $115 billion in EBIT, implying approximately $200 billion in gross margin by the end of the decade.
Similar to previous years, energy sector value pools show the highest levels of change, with oil and oil products decreasing by approximately 40 percent. By contrast, liquefied natural gas (LNG) saw a more moderate change (decreasing by 23 percent), partially due to US export capacity coming online more slowly than expected.1 Power and gas commodity pools decreased by approximately 40 percent.
Meanwhile, agriculture saw a nearly 25 percent drop year over year as supply responded to near-record prices from 2020 to 2023 and crop inventories moved closer to ten-year-trend levels (in many cases, agricultural commodity prices are closer to the marginal cost of production). Finally, metals and mining margins saw an uplift—although overall prices fell, several merchant trading companies2 performed better than in 2023—leading to a growing margin value pool of nearly 20 percent.
Taking a longer-term view, steady growth in margins is expected for the remainder of the decade. The growing liberalization of power markets, increasing energy volatility from widespread adoption of renewables, and the need to optimize flex assets and demand will mean that power, gas, and LNG markets will likely drive much of the expected growth. Oil and oil products will likely grow at a slower rate or even stay constant, making it likely this commodity grouping will be surpassed by power and gas as the largest value pool by 2030. Finally, margins from emerging asset classes related to the energy transition could further augment trading income over the next five years.
Read the full article by Joscha Schabram and Roland Rechtsteine / McKinsey & Company
