Commodity traders make billions as oil, copper, battery metals prices rise

Doug King set up his hedge fund in the early days of the commodity super-cycle in 2004. It was perfectly timed: voracious Chinese demand lifted the price of everything from oil to copper to record highs. Investors flooded the commodities sector. At the peak, King’s Merchant Commodity Fund was managing about $2 billion.

But the boom ended abruptly after the 2008 global financial crisis and the onset of the U.S. shale revolution. Prices plunged, big institutional money got out and many specialist hedge funds closed.

Fast forward more than a decade and King is having one of the best years of his career: a broad-based commodities boom has pushed up his hedge fund nearly 50% this year as raw materials from steel to soybeans hit multi-year highs. Commodities are back, and from pension funds to physical commodity traders, everyone is making money. The question now is whether it’s a temporary snapback from the pandemic or signals a longer-term shift in the structure of the global economy. King is in no doubt.

“We are facing a structural inflation shock,” King said. “There’s a lot of pent up demand, and everyone wants everything now, right now.”