Why LME-Discount, CIF Copper Without Pre-Financing Isn’t Real: No Money, No Metal
Why LME-Discount, CIF Copper Without Pre-Financing Isn’t Real: No Money, No Metal
The pitch is always the same: “We want Grade A cathodes, CIF, at an LME discount. A buyer in China is ready. We will pay from proceeds.” That is not a deal. That is a request for the seller to fund your trade, carry price and logistics risk, and gift you the arbitrage. If a clean discount existed, the producer or a tier-1 trader would lift it themselves.
Copper sells. Everyone “has a buyer.” What sellers need is capital or bankable paper. No pre-financing, no confirmed LC, no inventory facility = no title, no release, no shipment.
The short answer
LME-discount, CIF terms without pre-financing are rejected on contact. Bring money or a confirmed instrument, or there is no metal.
What sellers expect
- Pre-payment or LC at sight (confirmed): Cash on presentation of clean documents.
- Clear brand and location: LME-listed brand, approved warehouse, known operator.
- Defined Incoterms: CIF means seller pays freight and insurance; price reflects that.
- Hedging and timing: A plan for LME/SHFE basis and FX timing risk.
- Counterparty proof: KYC complete, mandate direct to the decision-maker.
Myths vs reality
| Myth | Reality |
|---|---|
| “There is 5,000 MT at a discount in a warehouse waiting for us.” | If a real discount appears, producers and top traders take it first. Inventory at a true discount does not sit. |
| “CIF at LME–X% with payment from our onward sale.” | CIF already puts cost and risk on the seller. A discount on top, without funding, is a non-starter. |
| “This is a risk-free flip to China.” | Basis moves, VAT rules, brand acceptance, and port queues remove “risk-free.” If it was free, it was taken yesterday. |
| “Release from warehouse, then we pay.” | No title without cash or a drawable, confirmed instrument. Warehouse receipts follow payment commitments. |
| “The seller needs our buyer.” | Sellers have buyers. What they want is speed, certainty, and finance. |
How real copper trades clear
- Pre-payment / advance: Buyer prepays a portion; seller ships against agreed LME formula and premium.
- Confirmed LC at sight: First-class confirmation; seller draws at shipment/presentation.
- Inventory repo / receipts: Financier pays against title in warehouse; buyer repurchases on exit.
- Offtake with rolling hedges: Ongoing supply; pricing vs prompt LME; funding in place.
All four models require cash or credit capacity. None rely on “pay from proceeds later.”
What you must bring
- Funding: Pre-finance production, place a confirmed LC, or arrange inventory finance. No money, no metal.
- Bankable paper: Clean LC wording, confirmation by a top bank, or a committed facility that pays on presentation.
- Operational readiness: Named warehouse operator, inspection protocol, shipping plan, and a hedge plan.
- Direct mandates: Real buyer, documented acceptance of brand and payment terms.
Red flags we decline
| Pitch | Reason it fails |
|---|---|
| “LME –5% CIF, payment from proceeds.” | Seller funds cost and risk while giving a discount. Mispriced and unserious. |
| “5,000 MT monthly, buyer ready in China.” | Everyone has a buyer. Show finance, LC terms, and acceptance criteria. |
| “Warehouse release before payment.” | No release without cash or a confirmed, drawable instrument. |
| “We will hedge later.” | No risk plan. Seller will not carry your exposure. |
LME: London Metal Exchange, the price reference. CIF: Seller pays Cost, Insurance, Freight to your port. Pre-financing: Cash in before or at shipment. LC at sight: Bank pays seller when documents are presented. Warehouse receipt: Title document issued by the warehouse.
If you can fund working capital or place clean, confirmable paper, we will structure and execute a compliant copper offtake. If you seek “LME discount, CIF, pay from proceeds,” we will pass.
Request Advisory SupportFinancely Group arranges structured commodity trades and working-capital finance through licensed lenders and traders on a best-efforts basis. Engagements require KYC/AML, sanctions screening, and signed mandates. We do not guarantee pricing or availability and we decline broker chains that assume risk-free arbitrage without funding.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
All submissions are
promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.
Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
Trade Finance
Tap into solutions like letters of credit, bank guarantees, and payment facilitation. We address the challenge of global transaction risk through structured strategies that foster cross-border growth. Complete the form to unlock streamlined funding aligned with your commercial objectives.
Submit a RequestProject Finance
Access non-recourse funding for infrastructure, renewable energy, or other capital-intensive ventures. We mitigate capital constraints by isolating project assets and focusing on risk management. Provide your details to receive a structure that drives growth and maximizes returns.
Submit a RequestAcquisitions
Secure financing for business or real estate acquisitions. We ease transaction hurdles by reviewing cash flow, synergy opportunities, and exit plans. Complete the form for a customized proposal that supports your strategic investment objectives.
Submit a RequestFor Banks
Financely assists banks facing Basel III pressures by distributing trade finance deals and providing collateral for letters of credit. We reduce capital burdens while preserving client relationships and fostering service expansion. Submit your request to optimize your trade finance offerings.
Submit a RequestOnce we receive your submission, our team will review your information to determine feasibility. If eligible, you will receive a proposal or term sheet within 1–3 business days. Visit our FAQ and Procedure pages for more information.
Disclaimer: Financely provides financing based on due diligence and feasibility. Approval is not guaranteed, and past performance does not predict future outcomes. All terms are subject to review. Financely primarily assists with structuring and distribution. Qualified parties carry out the project if the client approves the proposal.
