Top Trading Houses Weigh in on Energy

Top executives from the world's largest trading houses discuss trends in commodities trading at the FT Commodities Global Summit in Lausanne, Switzerland, this week.

The following are Tuesday's highlights:

JEREMY WEIR, TRAFIGURA CEO

Said Trafigura had recently increased its exposure to Russia but in line with U.S. and EU sanctions.

"We have been in Russia historically. We have increased activity of late because based on commercial business we have seen a niche and obviously (operate) within the sanctions. We understand the sanctions and comply with them. As long as we are aware there are no sanctions on oil trading in Russia".

He also said the company had stopped dealing with Nigeria at the end of last year as it saw "better opportunities elsewhere".

Trafigura plans to increase ownership of physical commodity assets except in oil exploration, Weir said.

"Most likely we will increase our asset base ... but certainly not in upstream oil where we don't have the knowledge and management experience."

Weir said Trafigura would also consider selling assets if the offered price is right: "It is important not to fall in love with assets".

On becoming the largest shareholder of zinc producer Nyrstar: "We saw a liquidity event which enabled us to take a position in the company which we though was good value, with the rights issue. Nyrstar is the largest refined zinc producer with 1.1 million tonnes.

"It did move into the mining sector, arguably at a difficult time in the cycle, it has had a difficult time. And through recommendation of two individuals on the board we think that they can provide assistence to get this company back on track."

TORBJORN TORNQVIST, GUNVOR CEO

"I personally believe low oil prices are behind us."

"The (global oil) oversupply in terms of percentage is very small. The oil price has overreacted to the downside."

MARCO DUNAND, MERCURIA CEO

"There are distressed assets in the U.S. but those are not the ones you may want to buy as their breakeven is $80-$90 per barrel."

However, Dunand said he did not expect U.S. production to collapse as new investors were coming in, including private equity.

NOBLE GROUP CEO, YUSUF ALIREZA

Said Noble was committed to increase disclosure of information to avoid a repeat of investor attacks. Providing more transparency is "lesser of the two evils" than shutting down access to information, he said.

LOUIS DREYFUS COMMODITIES DEPUTY CEO

Said transparency and disclosure are ever more important.

"In today's world, even if you want to stay secretive, frankly you have stakeholders who are interested. We have been issuing public bonds, so transparency and good governance are something to look at."

"You can be privately owned but having practives that give satisfactions to stakeholders."

In reply to speculations of a potential listing of the privately-held group: "An IPO is far from being the preferred option. Never say never, but it's really far off the table."

NING GAONING, COFCO CHAIRMAN

"After 10 years of excitement people start to worry again: will China continue to play a major role in the world economy ...remain a driving force in the commodities market? At seven percent today, China's GDP growth is the whole of Indonesia's GDP".

Regarding a potential IPO: "It could be too early to say but when I say this should not be a Chinese company but a global company... the IPO will help us to achieve this standard."

"I think (the IPO time) is when we manage better company and achieve proper earnings and then shareholders agree. That would take us 3 to 5 years. It's a total COFCO, Noble, Nidera: all agricultural assets."

On China's changing policy on food supply: "Even after 11 years of production growth in China...the cost is higher than ever because the land price, water, all the services got more expensive. Put it all together and policymakers have to rethink their self-sufficiency policy. They have to (adopt) an adequate import policy. It is a good thing to replace a higher cost (product) and leverage power on the world market.

"This year is the first year that the government plan for the agricultural budget is lower (than the year before). Which means we are not going to produce as much as we can. We are going to have an adequate import policy."

He said China's overall agricultural imports were set to rise to 200 million tonnes a year within 10 years from today's 120 million.

"I think soyabean imports are likely to grow more than other products, at about 5 percent a year or more. Imports of meat , dairy and beef, seafood will aslo increase. It's coming all the time."

On whether COFCO is considering investing abroad: "After the integration with Noble Agri I think COFCO will invest again in other companies."

"That is a place you cannot ignore," he said when asked if COFCO could expand in North America.

On whether COFCO is becoming more of a trader than a buyer: "People ask me: are you going to be a buyer or a competitor in the future? ...I think we will cooperate, sometimes we will compete."

SPENCER DALE, BP CHIEF ECONOMIST

Global oil supply and demand will balance out by the end of the year but a global oil stocks overhang of several hundreds of million of barrels will keep weighing on prices beyond 2015.

"It could take as long again for that stock to come down".

He said he understood why OPEC had decided not to cut production amid a U.S. shale oil boom instead of repeating its move of 2008 when it responded to a plunge in global demand by reducing supply.

"What is different is that the shock to which OPEC was responding was a persistent one, not a temporary one."

He also said that current dollar strength would stretch many economies, especially those natural resource producers, which have their currencies pegged to the dollar and might be forced to follow the United States in tightening their monetary policies, which "could be totally inappropriate for their economies".

BRETT OLSHER, GOLDMAN SACHS CHAIRMAN OF GLOBAL NATURAL RESOURCES

Said Goldman Sachs was confident the Chinese economy would grow by 6.5-7 percent a year in the next few years. Also said the dollar rally would continue, which is set to have profound implications for commodities markets.

Reporting by Silvia Antonioli and Dmitry Zhdannikov