Rising interest rates reshaping once-lucrative commodity trades

The industry is exposed to rising rates because trading houses rely on bank credit for the huge amounts of money needed to buy, transport, and store big volumes of commodities

As rates rise, the additional costs of a weeks-long journey or extended storage are making certain trades far less attractive. Picture: David Creedon

Higher interest rates are forcing commodity traders to rethink some deals and push up prices, in the latest example of how a period of rapid central bank hiking is reshaping global business.

The companies that buy, sell, and transport the world’s natural resources are particularly vulnerable to rising rates, because they rely on banking lines to finance their trades, from shipping a cargo of wheat or oil to holding inventories of aluminium.