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Trafigura flags credit risks for commodity producers 

October 21, 2015

Amanda Cooper and Libby George

Swiss commodity house Trafigura is racking up record oil trading volumes as it taps into price volatility but warns that merchants have to be more vigilant in the face of potential defaults and bankruptcies of credit-stressed producers.

Demand from China, the world's top commodity consumer, has slowed, and years of cheap credit have led to huge builds in production capacity of anything from crude oil to copper, triggering price crashes that have threatened the existence of some of the higher-cost raw materials producers.

One of the biggest challenges for the commodity sector as it weathers falling prices is the deterioration of counterparty creditworthiness, Trafigura Chief Financial Officer Christophe Salmon told the Reuters Commodities Summit on Monday.

Trafigura, which reported a 39-percent jump in first-half net profit to $654 million, is one of the largest raw materials traders, whose oil trading activities alone equate to around 3 percent of the global market.

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