UAE ranks second among global commodity trading hubs

Ranking underscores the country’s resilience to headwinds

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Published: Wed 22 May 2024, 7:05 PM

The UAE ranks second among commodity trading hubs worldwide, behind the United States and ahead of Switzerland, reinforcing its leading position as a thriving business powerhouse.

The UAE's continued prominence among the top global commodity trading hubs underscores the country’s resilience to headwinds alongside the ambitious vision of its leadership that is driving the country’s growth trajectory, said Feryal Ahmadi, chief operating officer of Dubai Multi Commodities Centre (DMCC).

The UAE’s commodities market is projected to reach a nominal value of $123.8 billion by 2024, and $141 billion by 2028 at an estimated annual growth rate of 3.31 per cent, according to Statista. In 2024, the average price per contract in the commodities market is $0.01.

“The strategic location, world-class infrastructure and business-friendly policies in Dubai provide us with a cutting edge that continues to attract businesses and investors from around the world,” said Ahmadi.

The DMCC Commodity Trade Index, presented in the Future of Trade 2024 report, evaluates ten major trading hubs by analysing three crucial aspects of commodity trade across ten specific sub-indicators.

DMCC said these indicators capture the essence of locational advantages, commodity wealth across commodities like coffee, grains and gold, financial services and logistics infrastructure, and institutional strength, offering a holistic view of each hub's role in global trade. The data for these indicators are sourced from global institutions like the World Bank and the United Nations.

“The insights gathered from the index in our report will guide our path in shaping the future of commerce, driving sustainable growth, and fostering meaningful partnerships that reinforce DMCC’s efforts to cultivate an environment ripe for businesses to succeed,” said Ahmadi.

The UAE continued to dominate in the category of commodity endowment factors (77 per cent) well ahead of all the other trading hubs, driven by its oil supply. The country also scored well in the institutional factors (66 per cent), moving up one place from the previous iteration to come fourth, largely attributed to its attractive tax rates and robust trade logistics infrastructure. The Index indicated opportunities for further collaboration and enhancement of trade relations to boost the score for locational and trading partner factors.

In 2024, the US leads the Index with a score of 59 per cent, reflecting strong performance across all categories, while its highest marks come from commodity factors and institutional strength. Notably, Switzerland has ascended to the top three hubs for the first time with a score of 46 per cent coming in strong on locational advantages and institutional factors, signalling its emergence as a significant player in the global commodities trade landscape. Singapore moved up three places to rank fourth with a score of 44 per cent, while Hong Kong climbed up one position to fifth place with a score of 41 per cent.

The UK 38 (per cent) witnessed the biggest falls in the ranking. The shift in the headquarters of oil company Shell from the Netherlands to the UK caused a big dent in the Netherlands’ locational score while the effect of Brexit and the increase in tariffs imposed by trading partners impacted the UK’s ranking. The relatively high corporation tax further weakens the UK’s score.

The bottom three performers remained unchanged, which are China (34 per cent), South Africa (18 per cent) and Nigeria (10 per cent), while rich in natural resources, they lag due to weaker institutional support and locational disadvantages. Eight of the hubs saw a decline in their Index scores as the gap between the top and bottom performers continued to widen, underscoring the major impact of geopolitical tensions and macroeconomic conditions on global trade.