In commodities, it’s a case of only the best and forget the rest
The job market for commodity candidates is changing: out go the risk takers, and in come the steady earners. The main focus? High performers in booming areas like LNG (liquefied natural gas).
The commodity industry – including financial institutions, corporates and hedge funds – has been hit by recent retrenchments, says Dominic Mound, consultant, Commodity Appointments. “And I anticipate 2012 will remain volatile on the hiring front,” he adds.
James Metcalfe, senior consultant, Selby Jennings, believes that commodities has only been “somewhat incubated” from the wider downturn in financial services recruitment. “And while trading houses are continuing to post record profits, there is not the appetite to recruit the large risk takers that there was in the bull market pre-financial crisis.”
The recruitment bar has also risen. “As a knock-on effect of the overall downturn in recruitment, many firms are only looking at the very best talent, who they know will add profits, rather than bulking up with several mass hires. Steady candidates who can reliably bring in a revenue stream are the ones in genuine demand,” says Metcalfe.
According to Mound, agriculture, coal and LNG and three of the sub-sectors generate the most hiring. Metcalfe adds: “If we take natural gas for example, there is a greater demand than ever for the resource. This leads to a larger number of suppliers competing to provide it, greater volatility and therefore increased market opportunities for trading companies.”
Large commodity trading houses are becoming more interested in LNG, says Metcalfe. “And the banks are increasing their interest in physical markets, with the Volcker Rule threatening their paper business, so they too are expected to hire in this space.”
By contrast, the metals market looks barren. “All the volatility was sucked out of the market in 2011 and isn’t showing promise to return in Q1 or Q2 of 2012. Niche concentrates and cathode traders are still sought after, with the majority of the hiring in the area looking to capitalize on the consistent demand of China and South America,” says Metcalfe.
Demand for talent also varies depending on the seniority of the role. In soft and agricultural commodities, for example, the market is saturated with associates and VPs, but supply is sparse at MD level.
Where’s the hiring happening?
Physical commodity trading houses are the biggest hirers right now, says Metcalfe. “They are at arms length from the draconian banking rules and frequently have assets which help to optimize their trading strategies.”
The commodity divisions of banks will remain conservative recruiters, with only a few strategic openings expected in the near future. “Hedge funds are being set up by disillusioned bankers who feel frustrated and suffocated with the increased restrictions put on them. However, funds are not typically frantic hirers; they take on board substantiated talent with broad knowledge in multiple asset classes.”