Glencore forecast profit of US$3.5 billion to US$4 billion this year from its commodity trading business, reiterating that the unit remains on track to beat its long-term target for a fourth straight year.

Glencore said in April it expected another bumper year from its traders, even as easing volatility and prices across commodity markets mean the industry is unlikely to replicate last year’s blowout earnings. The company’s latest forecast falls short of the record US$6.4 billion in core profit from the trading unit in 2022, but it is still well above its longstanding guidance range of US$2.2 billion to US$3.2 billion.

Glencore didn’t provide details on its trading performance but said the reduction in volatility means it has been able to release some of the larger-than-normal levels of working capital it had tied up in the business.

The commodity-trading industry experienced a blockbuster year in 2022, as the disruptions caused by Russia’s invasion of Ukraine sent prices and volatility soaring to create the arbitrage opportunities that traders thrive on. But while the turmoil helped fuel record profits across the industry, big daily price swings also became a liability, with exchanges and brokers demanding more and more cash to place and maintain trades.

“The particularly elevated commodity market imbalances and volatility levels that prevailed through much of 2022 have largely normalised, which, while clearly impacting profitability, has allowed for the release of some of the investment made in non-RMI marketing working capital in 2022”, Glencore chief executive officer Gary Nagle said in a statement.

Several years of huge profits across its business have left Glencore with debt hovering around zero, and investors will be looking for details of what the company plans to do with the cash when it reports interim results Aug 8. In February, it announced plans to return more than US$7 billion to shareholders in dividends and buybacks.

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Glencore has also spent much of this year engaged in a bruising fight with Teck Resources after making an unsolicited offer for the Canadian company. The latest twist in the saga came last month, when Glencore proposed buying Teck’s steelmaking coal business for about US8 billion as an alternative to its full takeover bid.

Glencore has already beaten its long-term target for trading profit for three straight years, which has prompted questions from analysts and investors about whether it should be adjusted. Senior executives have said previously that they plan to wait for markets to normalise before making any changes to the range.

In addition to its sprawling trading business, Glencore is also one of the world’s biggest miners. The company reiterated its full-year production forecasts, with output seen rising for copper, zinc and nickel in the second half. BLOOMBERG