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Plain-English lessons on physical commodity trading: how deals work, the documents, the trade terms, the products and how to stay safe.
30 articles
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New to physical trading? Read these in order. Each takes about five minutes.
- Basics · 5 min readWhat is physical commodity trading?Physical commodity trading is the buying and selling of real cargoes of metal, grain, energy and chemicals. Here is how it works and who takes part.
- Basics · 4 min readWho is who in a commodity dealProducer, trader, broker, mandate holder, end user, forwarder and inspector: what each role does, what each is paid for and how to tell them apart.
- Basics · 4 min readHow a commodity deal flows from enquiry to deliveryFollow a physical commodity deal from first enquiry to final payment: offers, specification, contract, payment, shipment, inspection, documents and delivery.
- Trade terms · 6 min readIncoterms 2020 explainedThe eleven Incoterms 2020 rules decide who arranges transport, who carries risk and who clears customs. Learn them in plain language, with examples.
- Trade terms · 5 min readPayment terms explained: LC, SBLC, TT, documents against payment and open accountCompare the main ways to pay in commodity trade: letters of credit, standby letters of credit, transfers, documents against payment and open account.
- Safety · 5 min readHow to spot commodity trade scamsDaisy chains, recycled offers, fake proof of funds and fee-first requests: the patterns behind most commodity scams and the questions that expose them.
Featured
- Documents · 5 min readThe bill of lading: what it is and how to read oneThe bill of lading is the key shipping document. Learn its three jobs, the main types, the fields to check and the problems to look for before payment.
- Documents · 4 min readCertificate of analysis and assay: how to read the numbersLearn what a certificate of analysis or assay report shows, which lines to check first and how to tell whether it really belongs to your cargo.
- Commodities · 5 min readScrap metal basics and how grades are describedScrap is traded by grade, and grade names differ between regions. Learn how ferrous and non-ferrous scrap is described, inspected, priced and shipped.
- Safety · 4 min readA due-diligence checklist for any counterpartyA practical, step-by-step checklist for checking a buyer, seller or intermediary before you commit: identity, authority, product, money and track record.
- Brokers and introducers · 4 min readWhat is an introducer or a mandate?Learn the difference between an introducer, a broker and a mandate holder, what a written mandate should say and how to work in the trade without owning goods.
- Brokers and introducers · 4 min readHow to get your first commodity dealA practical path to a first physical deal: pick one product, write a clear offer, find counterparties, check them, test small and build repeat business.
Browse by topic
Basics
What physical trading is and how a deal flows. · 4 articles
- Basics · 5 min readWhat is physical commodity trading?Physical commodity trading is the buying and selling of real cargoes of metal, grain, energy and chemicals. Here is how it works and who takes part.
- Basics · 4 min readPhysical, futures and spot: what is the difference?Spot, forward and futures describe when and how a commodity trade settles. Learn how each works and how physical buyers and sellers use reference prices.
- Basics · 4 min readWho is who in a commodity dealProducer, trader, broker, mandate holder, end user, forwarder and inspector: what each role does, what each is paid for and how to tell them apart.
- Basics · 4 min readHow a commodity deal flows from enquiry to deliveryFollow a physical commodity deal from first enquiry to final payment: offers, specification, contract, payment, shipment, inspection, documents and delivery.
Trade terms
Incoterms, payment, pricing and shipping terms. · 4 articles
- Trade terms · 6 min readIncoterms 2020 explainedThe eleven Incoterms 2020 rules decide who arranges transport, who carries risk and who clears customs. Learn them in plain language, with examples.
- Trade terms · 5 min readPayment terms explained: LC, SBLC, TT, documents against payment and open accountCompare the main ways to pay in commodity trade: letters of credit, standby letters of credit, transfers, documents against payment and open account.
- Trade terms · 4 min readFOB vs CFR vs CIF and how to work out landed costCompare FOB, CFR and CIF prices on one footing and add freight, insurance, port charges, duty and handling to find the true landed cost per ton.
- Trade terms · 5 min readQuantity tolerance, laycan, demurrage and despatchFour shipping terms that cause many disputes: quantity tolerance, laycan, demurrage and despatch. Learn what each means and how to write them clearly.
Documents
Bills of lading, invoices, certificates and inspection. · 7 articles
- Documents · 5 min readThe bill of lading: what it is and how to read oneThe bill of lading is the key shipping document. Learn its three jobs, the main types, the fields to check and the problems to look for before payment.
- Documents · 4 min readCommercial invoice and packing listWhat belongs on a commercial invoice and a packing list, how they are used by banks and customs, and which mismatches cause delays at the port.
- Documents · 4 min readCertificate of origin: what it proves and who issues itA certificate of origin states where goods were produced. Learn when it is needed, who issues it, how preferential origin differs and what to check.
- Documents · 4 min readCertificate of analysis and assay: how to read the numbersLearn what a certificate of analysis or assay report shows, which lines to check first and how to tell whether it really belongs to your cargo.
- Documents · 4 min readCargo inspection explained: what independent surveyors doIndependent inspection companies check quantity, quality and condition of cargo. See what they do, which certificates they issue and how to order an inspection.
- Documents · 4 min readThe KYC pack: what banks and counterparties ask forKnow-your-customer documents show who you are and who controls your company. See what a typical KYC pack contains and how to prepare one quickly.
- Documents · 4 min readCargo insurance and the insurance certificateWhat marine cargo insurance covers, how the insurance certificate works, what CIF and CIP require and what to check before you rely on a policy.
Commodities
Specifications and trade practice by product. · 8 articles
- Commodities · 5 min readScrap metal basics and how grades are describedScrap is traded by grade, and grade names differ between regions. Learn how ferrous and non-ferrous scrap is described, inspected, priced and shipped.
- Commodities · 4 min readCopper cathode vs copper concentrateCopper cathode is refined metal; concentrate is a mineral product that still needs smelting. See how they are specified, priced and shipped.
- Commodities · 4 min readChrome ore and concentrate: the specifications that matterChromite is sold on Cr2O3 content, chrome-to-iron ratio, impurities, size and moisture. Learn how to read a chrome specification and compare offers.
- Commodities · 4 min readWheat and grain: the quality parameters buyers checkProtein, moisture, test weight, falling number and foreign material decide how wheat and other grains are graded and priced. Learn the terms and the paperwork.
- Commodities · 4 min readFertilizers: urea, ammonium products, potash and NPKAn introduction to the main fertilizer products, how nutrient content is stated, how they are packed and shipped, and where special rules apply.
- Commodities · 4 min readCoal and petcoke: basics for buyers and sellersThermal coal, coking coal and petroleum coke are priced on calorific value, ash, sulphur, moisture and other parameters. Learn how to read the specification.
- Commodities · 4 min readLithium, spodumene and battery mineralsSpodumene, lithium carbonate and lithium hydroxide are bought on Li2O or purity and strict impurity limits. See how the battery supply chain trades.
- Commodities · 4 min readRefined fuels and bitumen: the basicsAn introduction to diesel, jet fuel and bitumen trade: specifications, quantity measurement, storage, documents and the checks that matter most.
Safety
Scams, due diligence and safe payment. · 4 articles
- Safety · 5 min readHow to spot commodity trade scamsDaisy chains, recycled offers, fake proof of funds and fee-first requests: the patterns behind most commodity scams and the questions that expose them.
- Safety · 4 min readA due-diligence checklist for any counterpartyA practical, step-by-step checklist for checking a buyer, seller or intermediary before you commit: identity, authority, product, money and track record.
- Safety · 4 min readSafe payment practices in commodity tradePractical ways to structure payment so risk is shared: stages tied to inspection and documents, bank-confirmed details, and the checks before every transfer.
- Safety · 5 min readICPO, LOI, SPA, NCNDA and IMFPA explainedThe acronyms that fill trade chats, explained in general terms: what each document is for, what it does not do and why order matters.
Brokers and introducers
Mandates, commissions and your first deal. · 3 articles
- Brokers and introducers · 4 min readWhat is an introducer or a mandate?Learn the difference between an introducer, a broker and a mandate holder, what a written mandate should say and how to work in the trade without owning goods.
- Brokers and introducers · 4 min readCommission agreements in general termsHow intermediary fees are usually structured in commodity trade: per ton or percentage, who pays, when, and the clauses that keep everyone aligned.
- Brokers and introducers · 4 min readHow to get your first commodity dealA practical path to a first physical deal: pick one product, write a clear offer, find counterparties, check them, test small and build repeat business.
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