Japan trading houses post record profits as oil and copper prices surge

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Japan trading houses record profits

Highlights

Mitsui reports a ¥40bn ($253mn) annual profit boost from Middle East conflict, with record first-half results and expected LNG business upside.
Mitsubishi Corporation raises its full-year net income forecast by 9% to a record ¥1.2tn, announces a ¥1tn ($6.3bn) share buyback, and closes shares 8% higher.
Copper prices peak at $14,875 a tonne in early September on tariff speculation and AI-related demand, supporting profits for Marubeni and other Japanese trading houses.

Profit gains from energy and metals

As reported by the Financial Times, four of Japan’s biggest commodity traders report record profits on Wednesday, helped by energy market disruption linked to the Iran war and by rising copper prices.

Mitsui says the Middle East conflict boosts annual profits by ¥40bn, or $253mn, after a record first half, as its global portfolio of oil, gas and chemicals assets captures higher commodity prices and stronger demand. The company also says there is further upside expected in the following year for its liquefied natural gas business, with higher trading volumes anticipated.

Mitsubishi Corporation also benefits from the stronger commodity backdrop and raises its full-year net income forecast by 9 per cent to a record ¥1.2tn. It follows that move with a ¥1tn, or $6.3bn, share buyback, helping its shares reverse earlier losses to close 8 per cent higher, while the Nikkei 225 falls 1.4 per cent.

The trading houses, including Marubeni, are also supported by copper prices, which rise on expectations that the Trump administration could impose tariffs on the metal. Copper, widely used in electrical infrastructure and appliances, peaks at $14,875 a tonne in early September as expected U.S. tariffs add to AI-related demand and persistent supply challenges for miners.

Geopolitical risks keep outlook uncertain

Katsuya Nakanishi, chief executive of Mitsubishi Corporation, warns that the Middle East conflict could drag on and push oil prices higher because of uncertainty over Donald Trump’s diplomatic strategy after Democrats regain control of Congress in the midterm elections. He says shifts in foreign policy and geopolitics could prolong the regional crisis and add to inflation if resource prices continue to rise.

Concern over U.S. policy unpredictability is echoed by Mitsui chief executive Kenichi Hori, who says the company is preparing for a world in which geopolitical risks continue to be unpredictable rather than calming down. Oil traders and analysts are also watching whether Trump’s approach becomes more erratic after Republican election losses.

Trump tells the FT on Wednesday that the U.S. has no immediate plans to attack Iran and plays down speculation that he is preparing to escalate the conflict under pressure from Israel. The strong earnings at Japan’s trading houses, whose largest shareholder is Berkshire Hathaway, underline how sustained oil prices above $100 a barrel over the past two months are delivering windfalls across the global energy sector, following similarly strong quarterly results from U.S. and European oil majors.

In our earlier article on conflict-driven spikes in oil shipping costs, we explained how attacks and rerouting risks tied to the U.S.-Iran and Russia-Ukraine wars sent tanker and insurance rates sharply higher on key routes such as Hormuz and the Red Sea. We also noted that rising freight can become a major part of the delivered oil price, squeezing refiners and import-dependent Asian markets while creating windfall profits for tanker owners.

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