McKinsey: Commodity Traders Navigate Shifting Supply Chains

A reset is underway in commodity trading, with traders recalibrating after years of strong profits.

According to McKinsey’s 2025 Commodities Trading Report, earnings before interest and tax (EBIT) value pools shrank by more than 30% in 2024 compared to the previous year. This follows a period of exceptional earnings since 2018.

Despite the setback, the sector is on track for steady long-term growth, with EBIT projected to reach US$115bn by 2030—an annual increase of 10%, more than double the average of the past decade.

Supply chain shifts are at the centre of these changes. The oil sector, once dominant, is seeing declining profitability, while power and gas—especially liquefied natural gas (LNG)—are emerging as the largest value pools.

Meanwhile, agriculture and metals markets are responding to shifting demand patterns and production challenges, reshaping trade flows.

Energy supply chains in flux

The report highlights that oil and oil products suffered a 40% drop in EBIT in 2024. This decline comes amid growing refining capacity and weaker demand in key markets like the US and Europe.

Several refinery closures have been announced, while new refining hubs are emerging in the Middle East and Africa.

As demand shifts, traders are reassessing supply chains, with some turning to M&A to gain a foothold in downstream assets, such as retail and refining infrastructure.

Liquefied natural gas (LNG) also saw a decline, with a 23% drop in EBIT, partially due to slower-than-expected US export capacity coming online. However, LNG remains a key component of the energy transition and demand is expected to grow in the coming years.

European gas prices, despite declining from their 2022 peaks, remain about 50% higher than in 2021, driven by supply chain constraints and geopolitical uncertainties.

Power and gas markets are undergoing a fundamental transformation. Market liberalisation and electrification trends could drive long-term growth, even as EBIT dropped by around 40% in 2024.

In Europe, corporate demand for renewable energy pushed power purchase agreements (PPAs) to a record 21 gigawatts (GW) in 2024. In the US, data centres are driving demand, with forecasts suggesting a 15% annual increase through 2030.

However, supply chains remain strained by ageing infrastructure, slow project development and uncertainty over energy demand from AI technologies.

Agricultural and metals supply dynamics

The agricultural sector experienced a nearly 25% decline in EBIT as global supply chains adjusted to the near-record prices seen between 2020 and 2023. Crop inventories are returning to ten-year-trend levels, easing some of the pressures that previously disrupted trade flows.

However, shifting weather patterns and geopolitical risks continue to pose challenges for global food supply chains.

Metals and mining, on the other hand, saw margins improve. Several merchant trading firms performed better than in 2023, contributing to a 20% increase in margin value pools.

As energy transition technologies drive demand for critical minerals, traders are expanding their focus on battery metals like lithium, nickel and cobalt.

Supply chains for these materials are evolving, with new sources emerging in Africa and South America to counterbalance China’s dominance in processing.

The road ahead for commodity supply chains

Despite the turbulence of 2024, commodity traders are adapting to a rapidly evolving landscape.

The energy transition, increased electrification and the growing role of sustainable commodities are reshaping trading opportunities. Market liberalisation is creating new avenues for power and gas trading, while AI-driven data analytics are becoming essential tools for success in increasingly complex markets.

Looking ahead, oil and gas supply chains face structural changes, with demand patterns shifting away from traditional OECD markets towards emerging economies in Asia, the Middle East and Latin America. Traders are adjusting by investing in flexible infrastructure and expanding their reach into new geographies.

The rise of renewables, storage solutions and decentralised energy production is further complicating supply chains.

Battery storage, in particular, is becoming a crucial but challenging asset class for traders, requiring advanced modelling and risk management.

Meanwhile, short-term volatility is rising due to weather-dependent power generation, adding another layer of complexity to supply chains.

As commodity markets continue to evolve, traders who can navigate supply chain disruptions, leverage data-driven insights and adapt to regulatory shifts will be best positioned for success.

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