The process of closing a commodities deal is complicated and someone has to simplify it for you, but you should not expect this simplification to be anything other than an easy way to learn the complicated process.

There are eight steps, maybe. All your work is done in the first few. Your skill is only needed in getting from step one to step three. All other work is done by others. The process begins with a phone call and/or email from a buyer or a broker, who wants a soft price quote. The soft price comparison tables are already stated on our web site and in our brochures and if our prices are attractive enough, then you have to provide us with written documentation from the buyer that he wants to buy.

Do your NCNDA and IMFPA at this time. Now we request a formal offer, like an ICPO (Irrevocable Corporate Purchase Order) or an informal, LOI (Letter of Intent) with soft probe. The seller considers the buyers offer and responds with an FCO (Full Corporate Offer). If the buyer agrees, a final contract is prepared, signed and arrangements are made for shipment, including an SGS inspection for quantity and quality. The bank has authorization to pay the seller, when the ship leaves the port and thats when you get paid, as well Money is wired to your account.

Here is a visual aid

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This is valuable information and well worth the time it takes to master the process
 
 

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How long does it take to do each of the tasks? When the buyer or broker asks for a price quote, it should take very little time to satisfy their request (just see our prices here) and if the price is agreeable, you might be able to send the NCNDA over the same day. If the buyer has already prepared an LOI or ICPO, you might get that very swiftly, as well. Our partners will not give you an FCO in one day. Usually we reply with FCOs or Soft Offers within 24 to 48 hours, but there are also suppliers who need 7 days to get you the FCO. Then you have to get it to the buyer for review. How long does that take?  You might ask, during the days you wait for the FCO What else do you have to do?  The buyer will be calling you, every day, asking where it is. It could take less than five minutes for the buyer to review it and agree. Then you have to get the final contract from the supplier and we budgeted seven days for each and three days for the buyer to sign the final contract, once its ready. The supplier already checked on supplies and when he gets the contract back, he will want to load the ship. Ships load at the rate of about 5,000 MT per day and so 25,000 mt will load in five working days. What if the order is 50,000 MT per shipment?  Then we need ten working days, so I figured 2 weeks, but we might load one ship and it sails, while we load the next ship. If it sails, youre paid, so dont worry about the size of the order Ships typically carry 25,000 MT.

Time For Each Task

 

Below is  chart representing the time required for each task

You can visualize how much longer it will take, depending upon where you are, at any moment The entire process is about 40 days, if your project is typical, but the time required can vary widely.

 

Controlling the Greed

Brokers are excessively greedy and they completely ignore competition and so, when a sensible broker meets a buyer, he can easily take the deal away. The biggest mistake a broker can make is overcharging. How do you control this and get your fellow brokers to be sensible?
Often, there are many brokers in the deal and each wants $1/MT in commission, not because its fair, not because its competitive, but solely because its a lot of money and brokers want to make a killing on every deal!

If youre going to be useful in commodity deals, you have to master some vital skills. You have to learn to control the greed of your fellow brokers and persuade them to choose not between a killing and a share of $1/MT, but between a share of the $1/MT and nothing, because thats what theyre going to get, by being excessively greedy

How Do You Make Brokers Sensible?

You might ask them to look at the image above. Of all the above tasks, depicted, which ones are brokers actively involved in?
To earn his or her money, does the broker...

1. load the ship?
2. unload the ship?
3. What do you suppose those workers (longshoremen) are paid?
4. Is the broker going to wire funds, to pay everyone?
5. sign the final contract?
6. prepare the ICPO?
7. do the SGS inspection?
8. arrange the L/C?

When you think about it, brokers do very little, in the entire process, yet they want to charge as if they did it all. This is not very sensible and produces many failures. When a buyer orders 72 million MT of cement and there are six brokers in the deal, hes not going to pay each $1/MT. None of the brokers deserves $72 million, no matter what he or she did, to facilitate the deal, but often, this is what brokers demand.

When you see the tasks and the time required for each, you can see that the broker is involved early in the process and has little to do, after that. Most of what brokers do is wrong, done poorly or forged, falsified or is an outright lie! Many times, brokers have prejudices which confound the deal, not facilitate it, and those mistakes have to be undone, before the deal can proceed. If a broker set his fee at what he made last year, most would work for next to nothing. If a broker set his fee at 50% more than he made last year, all of them would be working dirt cheap and their income would grow at a ferocious rate Instead, they overcharge and wind up with nothing. On an order for 72 million MT, even $1/MT is a lot and you would think that six brokers could cooperate in sharing $72 million, but they demand $72 million each and that kills the deal!

Now, how can you organize brokers and convince them to cooperate?

That is your most important task. You dont have much else to do. We have found some of the best suppliers. We have collected the price quotes and organized the suppliers. We have eliminated all those who are not sensible and what we offer is a goldmine for you. All you have to do is control the greed, by making your associates sensible. Can you do that?

We have collected all the documents you need. All you have to do is, download them. We will even help you fill them out, if you cant do it
We will coach you, every step of the way, even if our share is equal to yours and that of the other brokers. When it comes time to decide who deserves what, we hope you understand what we did for you and the others.

Wishing you success!

Yours sincerely,

 

21st Equity Homes Manufacturing Inc..

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We are OFFICIAL DIRECT MANDATE HOLDER and have direct contact with our partners allocations, hence, theres no broker chain. In order to send you our brochure stating prices, payment terms & procedures please e-mail us ASAP.

Should you have any questions, please contact us today. (Please read also our Cement Mandate Letter, verified by Pinsent Masons our UK Law Firm and The Process of Closing a Commodities Deal) and our Letter of Assurance)