Oil prices
One person with a clear view of the impact the economie
downturn has had on companies operating within the
commodities sector is Diane Boogaard, Rabobank's Global
Head of Trade and Commodity Finance. According to
Boogaard, most clients weren't greatly affected during the
first months of the crisis.
"At the start of the crisis, commodity prices were very high
- historically high, in fact. Now that they've plunged - steel,
cotton and iron ore have all fallen - clients are more affected.
That fall more or less began when China started to stockpile
commodities just before the Olympics. Then during the
Olympics there was very little movement of goods within
China, partly because of security and environmental concerns.
And shortly after the Olympics ended the credit crisis really
hit, so China was hesitant and started to use up these huge
stockpiles. The result? There's been very little demand from
China of late."
"But it's important to note that this tail-off in demand from
China wasn't really caused by the credit crisis, but mainly
because of the stockpiling earlier in the year. And this just
exacerbates the lack of purchasing of commodities, so there's
a very thin market with very little trade happening. As a result,
our customers currently need us less because they don't
have so much to finance - first of all less volume, but also
lower prices. Having said that, they do need access to credit
facilities, because they always need some form of finance. So
it's really a constant dialogue between us and our customers
as to what are you willing to do and what are you able to do."
Gerard van Rijt, treasurer of Vitol, a Rotterdam-based oil
company that ships 200 million tonnes of oil annually and
has revenues of over $100 billion, echoes Boogaard's view.
He explains that the crisis has only really impacted Vitol
over the last six months.
"Over the past six months or so we've had to look closely at
our banking relationships. We've seen consolidation within
the banking world, especially in the Netherlands, which is
ISSUE 18 THE WORD
