ChemChina sells back 12% Mercuria stake

A six-year partnership between Chinese chemical group ChemChina and Swiss oil trader Mercuria has been wound down, as geopolitical tensions lead to frayed ties in the commodities world.

Mercuria on Tuesday said it had bought back the 12 per cent stake that ChemChina purchased in 2016, after a “successful” partnership.

The company did not give a reason for buying back the stake.

Tensions between the US and China, as well as the pressure of complying with Russian sanctions, have made life more difficult for the commodities trading houses that move raw materials around the world.

Despite disruptions to global trade flows providing a huge boost to trading houses’ profits, smaller outfits have often struggled with rising margin requirements as volatility jumped following Russia’s invasion of Ukraine.

Mercuria, which is among the world’s largest independent oil traders, was founded in 2004. Its 2016 partnership with ChemChina, which valued the Geneva-based group at $3bn, was seen as a key strategic move for both companies.

Mercuria signalled two years later that ChemChina could increase its stake to as much as a third, and Mercuria might take a stake in ChemChina at the same time. However, those deals never came to pass.

Mercuria and ChemChina will continue to collaborate as trading partners, even though the Chinese group no longer owns a stake, said a person close to the company.

ChemChina in 2021 merged with Sinochem, one of China’s top four oil companies, to create a state-backed industrial powerhouse with $152bn in sales.

The repurchase of ChemChina’s stake, which was first reported by Reuters, ends what Mercuria described on Tuesday as a “successful six years of commercial and strategic co-operation consistent with the investment terms and time horizon initially contemplated”.

Mercuria’s gross profits last year rose by half to $2.8bn on revenues that jumped by the same percentage to $180bn.

The stake sale comes weeks after the Abu Dhabi National Oil Company entered talks with Mercuria’s rival Gunvor about acquiring part of the Geneva-based business.

ChemChina could not be reached for comment.