Japanese trading houses on the prowl as record earnings boost appetite

TOKYO (Reuters) by Yuka Obayashi – Japan’s trading houses are scouting for assets as they enjoy their best profit outlook in six years, driven by higher prices for commodities from metals and coking coal to oil and natural gas. Equipped with a nearly $50 billion war chest, trading houses are looking to bolster their global commodity supply chain networks, eyeing gas fields in Australia, oil in Iraq and coal and copper assets. But – still smarting from huge writedowns in the last investment cycle – big debt-fueled acquisitions look to be off the agenda, with the focus on greenlighting undeveloped assets, taking bigger stakes in existing projects, and trading up to better quality operations. “Now we have a lot of money that we can invest. We didn’t invest so much in recent years,” said a senior executive from a major trading house on condition of anonymity, declining to be named. “We want to be in the driving seat in investments. We are searching for good projects,” he said. Known as shosha in Japanese, trading houses led by Mitsubishi Corp and Mitsui & Co fulfill a quasi-national role by importing everything from oil to corn to sustain the country’s resource-poor economy. Together… continue reading

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