Commodity trade finance: Opportunity in disruption

How commodity trade finance evolves through disruptive times.

26 March 2026

7 mins

Corporate & investment bankingTrade & working capitalTransaction banking

As supply chain difficulties and volatile commodity flows once again make headlines around the world, commodity trade finance (CTF) remains the backbone of global commodity transactions. The commodities sector has undergone an impressive evolution in the past decades, driven by macro trends and short-term shocks, and is now facing some of its biggest challenges yet. However, CTF providers are supporting the industry to improve its resilience and innovation.

In the third episode of Trade Finance Global (TFG) and Standard Chartered’s five-episode podcast series, Future of Trade, TFG’s Mark Abrams spoke to Clemence Avril, Global Head of Commodity Trade Finance at Standard Chartered, to delve into the sector’s landscape and unpack how this change is sparking opportunities.

We've seen shipping and transit disruptions, longer bottlenecks, and freight costs through the roof. It has been quite a difficult trading environment, but that volatility also creates an opportunity.

Clemence Avril

Global Head of Commodity Trade Finance

The conversation maps changes, such as market consolidation, digitisation, and the incorporation of new technology, in the context of today’s changing economic and geopolitical landscape.

Changing players in a changing industry

Volatility in the Middle East dominates today’s global commodities trade conversation. But the industry has had a hectic few years, between the COVID pandemic, the Ukraine-Russia conflict, trade tariffs and growing trade barriers.

These protracted disruptions led to much tighter margins for commodity traders, forcing many to reconsider their cash flow strategies. “Clients are becoming increasingly sophisticated, both in their trade asks and in their treasury needs. For example, clients are really mindful about their balance sheet today and are trying to diversify their funding pools,” explained Avril.

As a result, a diversity of new players are entering the CTF scene. Private equity, private funds, and other non-bank lenders have all begun setting up trade finance teams to meet commodity traders’ growing liquidity needs.

However, traditional banks still play a central role in facilitating commodity flows. “Standard Chartered has been involved in commodities for years, starting from oil and energy trading all the way to metals and agricultural commodities.” explained Avril.

As new players enter the market on the financing side, the commodities trading landscape has been changing, too.

Over the past four or five years, we have seen a lot of consolidation in the trader space and the exit of smaller player.

Clemence Avril

Global Head of Commodity Trade Finance

Instead, established companies from other sectors have been entering the commodities space. Take, for instance, national oil companies in the Middle East setting up trading arms.

Another key change has been the entry of government funds into some commodity markets, especially critical commodities like agricultural goods.

Overall, the macro trend over the past few years has been decisively tending towards diversification – both in commodity types and their corridors.

Everybody wants to capture the supply chain,” explained Avril. “We have seen American oil players setting up trading arms in Singapore and in China, and Chinese trading arms of oil national companies setting up offices in Dubai, London, and New York.”

That the CTF sector is projected to reach an unprecedented USD135 billion in size by 2030 reflects its growing importance and the ample opportunities for both traders and financiers. However, building resilience in the face of geopolitical challenges will be crucial to maintain this growth.

Building resilience through diversification

Last year, turmoil in the Red Sea and Strait of Hormuz led to higher freight costs and rising insurance premiums as cargoes were forced to reroute or face high risks. This year, the turmoil has spread further east and escalated sharply in severity become even more disruptive: the closure of the Strait of Hormuz, near-halt of air traffic over the Middle East, and strikes onto energy infrastructure are making for a fast-moving, unpredictable trade environment.

The overall trend, then, is set to continue: skyrocketing energy prices, exacerbated by rising compliance costs for their traders, who must ensure supply chains are in line with regulations.

This has radically changed how the industry looks at its supply chains. “The old model of single origin, single commodity, lowest freight costs – it’s gone,” said Avril. To cope with the uncertainty, commodity traders must have multiple suppliers in a wide range of jurisdictions in order to dodge disruptions and sidestep sanction risks.

Increasing the optionality in a supply chain – whether it be through multiple individual suppliers, countries of origin, or trade routes – makes it more able to adapt to sudden shocks, increasing its resilience.

Diversification also comes in the form of moving up or down levels of a supply chain: “Traders are increasingly going up the value chain and taking equity stakes in offshore oil fields or mines in order to enable their supply,” said Avril.

Other commodity traders are moving away from their onetime area of specialisation and expanding into new commodities – often entering the metals space. Commodities like copper, cobalt, and lithium are growing at unprecedented rates, driven by rising demand for electric vehicle batteries. Demand for lithium is projected to grow by up to 30 per cent this year alone, and copper prices are expected to rise by 14 per cent in the first half of 2026.

Expanding into different markets and sectors also gives commodity traders access to new pools of liquidity, be it through banks or other investors. To respond to this growing, globalised demand, the CTF industry is enacting changes of its own.

CTF’s future: adaptation and digitalisation

Amid these rapid changes, digitalisation, a process two decades in the making, may be facing a turning point. Digitalisation can simplify the trading process for every player in the supply chain, make procurement more flexible, and simplify data collection. This has the added benefit of preventing commodities fraud , which still often takes advantage relies of paper-based documents and unsecured transactions.

Much of CTF fraud relies on the same mechanisms year after year: the industry loses millions every year at the hands of forgery, double financing, balance sheet fraud, and theft. Using tools like artificial intelligence (AI) or blockchain could have a massive impact on reducing fraud if used well, explained Avril. “If we start using digital blockchain technology, the risk of paper forgery will be reduced. Transactions will be instant, there’ll be more visibility, and traceability .”

However, “the issue is really the adoption rate,” explained Avril. “Digitisation only works if you have multiple parties adopt the same standards.” Just one customs agent not accepting electronic bills of lading (eBLs), for example, can throw a wrench in a whole transaction.

The same is true for digital blockchain technology, much discussed but still relatively seldom used in the CTF and wider payments space. “Stablecoins will have a seat at the table for any payments going forward,” said Avril.

Making payments through digital currencies means that an importer can, for example, pay for a shipment as soon as it reaches the port, even if this happens outside the trading hours of traditional payment systems – thus avoiding expensive demurrage charges and late fees.

“In the near future, stablecoins will become another element that clients can use as a funding or a payment means for their trade activities,” predicted Avril. The broader category of digital assets – from smart contracts to tokenised cargo and securities – is increasingly a focus of innovation, promising to make trade even faster and more flexible.

The broader category of digital assets – from smart contracts to tokenised cargo and securities – is increasingly a focus of innovation, promising to make trade even faster and more flexible.

AI, of course, is another major area of innovation, especially for its potential to analyse data and identify fraud, but perhaps not yet. “AI still remains a work in progress: we’re at the beginning of the AI revolution,” said Avril.

While the timelines for digitalisation and blockchain adoption are still debated, the industry is increasingly moving to adapt to and drive the technology.

Digitalisation aside, the biggest drivers that will determine the direction of the CTF industry in the next few years are likely to be geopolitical.

Traders are going to have to be even more nimble in sourcing new trade corridors. With new trade corridors, they might need new trade risk structures, and banks are going to have to adapt.

Clemence Avril

Global Head of Commodity Trade Finance

However, the ultimate outlook remains optimistic. Rather than cowering in the face of shocks, players from across the CTF industry have taken them as an opportunity for growth, which bodes well for the ever-turbulent future.

Adapting to disruptions “will be key for commodity traders wanting to expand their business and grow it sustainably,” said Avril. “As a bank, we will continue to be innovative in terms of our risk appetite, our structures, and where we accompany our clients so that they can keep bringing commodities throughout the world.”