The last 12 months for the Commodities, Chemicals, and Oil and Gas sectors have seen pressures never-before experienced, not even in previous global recessions.
The pandemic has hammered commodities creating a challenging environment for commodity traders, facing short-term disruptions of physical supply, a rapidly deteriorating credit environment and potentially tighter regulatory oversight.
The recent high profile corporate collapses including Hin Leong and Zenrock have also highlighted structural risks such as the lack of transparency underpinning the global commodities trade, which remains critical to the small, open economy of Singapore. The most recent reaction to these collapses have prompted banks to cut back on commodities trade finance and lending. ABN Amro and BNP Paribas have also chosen to exit commodity trade financing after the series of losses.
Gold prices have soared to a record high, with investors rushing to find safe places to park their money as concerns grow about a resurgence in the coronavirus and the impact that could have on the global economy. Analysts at UBS expect gold to reach $2,000 before the end of the year, driven higher by low US interest rates, a weaker dollar and tension between the United States and China.
On the renewable energy side, though we continue to see disruptions in Asia’s energy sector for certain asset classes, the availability of capital and activity in the sector remain positive giving strong impetus for the adoption of renewable energy. Recent announcements by the Oil Majors and large trading companies including BP, Shell, Vitol are adopting twin track strategies. BP in particular is looking to focus on streamlining its fossil fuel businesses and grow in renewables.
Agricultural commodities considered essential and income inelastic, such as wheat, grains and oilseeds, have seen minimal direct impact. However for commodities such as biodiesel, dairy, cotton and coffee, the demand has dropped due to lockdown measures leading to bottlenecks in supply chain and lower consumption from home and retail.
Impacts on hiring in Commodities, Chemicals, Oil & Gas roles in Singapore
These forces are leading to delays in new business expansion plans, at least until the situation improves and, as a consequence, have impacted recruitment in 2020 as follows:
- Slowdown on trader recruitment; commercial headcount for commodity firms has taken a back seat as they are adopting a “wait and see” approach.
- Demand for support functions including trading analytics, trade operations/ trade executions, chartering, shipping operations remains steady.
- Trading firms placing even greater emphasis on talent within risk and governance functions such as credit risk, market risk/ middle office, treasury and trade finance operations. This is particularly prevalent for mid-level experienced hires.
- Fund raising and project financing talent has been on the rise, particularly for capital intensive players including LNG and renewables.
- Quantitative risk roles continue to hold steady as companies manage their risk more effectively through quantitative methods.
- Slowdown in LNG hiring due to challenging headwinds. We have seen more replacement roles than new hires.
- ETRM/CTRM Technology Business Analyst continues to be a recruitment hot spot driven by the need for a robust risk management system.
- Rise in demand for software engineers (mainly C#) who are able to customise CTRM/ETRM platforms.
- A slowdown in digital transformation/ data scientist roles as firms shift their investment to the core functions.
- Continued hiring in HR functions including HR Generalist, HR Business Partnering. However, there is selective hiring in areas including Compensation & Benefits, Organisational Development and Talent Management.
There’s no doubt that the pandemic has put commodities supply chains in the spotlight and raised concerns – from oil demand to food security and stable access to raw materials. The pandemic has the potential to lead to permanent changes – not least amidst changes in government policies, and reassessment of strategic planning. As a result, the coronavirus may have long-lasting impacts on businesses and recruitment.
Take a look at the 2020 Predictions vs Reality mini-series so far: