Glencore trading profit poised for best-ever year

Glencore (LON: GLEN) said on Friday that the first-half year profit from its commodities trading unit is on track to achieve its annual earnings target in the first six months of 2022, placing it on course for its best-ever year.

The Swiss company expects adjusted operating profit to exceed US$3.2 billion for the first half of the year boosted by soaring commodity prices, supply disruptions and volatility. The figure compares to the record profit of US$3.7 billion the company recorded in full-year 2021 and it also beats its long-term guidance range of US$2.2 billion to US$3.2 billion.

Prices for most of what Glencore mines, including thermal coal, have reached record highs in recent months as a result of market volatility, shortages triggered by covid-related lockdowns and the Russian invasion of Ukraine.

Shipping coal by train at Glencore's Prodeco coal project in Colombia. Credit: Glencore

The miner and commodities trader increased its forecast for thermal coal benchmarks in the first half to between US$82 and US$86 per tonne from a February forecast of US$32.8 per tonne for the year.

With costs increasing due to the broad inflationary pressure coming from rocketing diesel and electricity prices, the company expects its average FOB (freight on board) thermal unit cost for the first half to be US$75 to US$78 per tonne, compared to earlier guidance of US$59.3 for 2022.

Glencore noted market conditions would probably be closer to normal in the second half of the year, adding it would release the first-half production report on July 29 and half-year financial results on August 4.