Why “We Have a Buyer for All Your Copper” Never Buys a Single Tonne
Why “We Have a Buyer for All Your Copper” Never Buys a Single Tonne
I trade physical copper. I sit on calls with producers in the Copperbelt, rail operators, warehouse managers, and banks that fund pre-export flows. Every week I get emails claiming: “We have a buyer who can take the whole of DRC, Zambia, Chile, and Peru at an LME discount, CIF, payment from proceeds.” They won’t buy even one tonne. Here’s the sober reason why.
Copper moves for whoever funds the chain and carries risk. No funding, no bankable paper, no operational plan = no allocation. A “buyer” without those three is not a buyer. They’re a spectator with a Gmail account.
How copper actually moves (simplified, but real)
| Link | What happens | Who pays | Why the fantasy fails |
|---|---|---|---|
| Production | Ore → SX-EW/ER → Grade A cathode; QA/assay, brand allocation | Producer using cash flow, PXF , or trader prepay | Output is pre-sold to lenders/offtakers. “We’ll take 5,000 MT” is noise without replacing that finance. |
| Border & inland | Trucking to border (e.g., Kasumbalesa), rail/road to port; storage | Financed party (producer/trader) | Slots and storage are booked against financed lots. No title, no slot. |
| Port & ocean | Warrants/receipts, BL issuance, ICC(A) insurance, vessel laycan | Seller on CIF or buyer on CFR/FOB per contract | CIF at a discount without prepay asks the seller to bankroll freight and hand you margin. It dies instantly. |
| Pricing & risk | LME hedge, FX cover, SHFE basis management, margin calls | Party with credit lines and limits | No hedge line = you cannot time price. Your “discount” evaporates with carry and basis. |
| Import & delivery | CIQ/brand acceptance, VAT cash lock, last-mile trucking | Buyer or bonded financier | “Pay from proceeds” ignores VAT timing and brand rules. Paperwork beats talk. |
PXF and the waterfall: why there is no spare cargo for you
Pre-export finance (PXF) advances cash to the producer against future shipments, secured by offtake and collections. Collections sweep into a controlled account: fees → interest → principal → residue to the producer. If you want allocation, you either replace that funding or stand behind it. There is no “free” 5,000 MT waiting for an unfunded middleman.
The three tests every real buyer passes on day one
| Test | Minimum proof | What time-wasters send |
|---|---|---|
| Funding | Prepay % or LC at sight with target confirming bank, draft wording attached | “Payment from proceeds” or “SBLC later” |
| Risk | Written hedge plan (LME/SHFE), margin capacity, bank lines named | “We’ll hedge later. Price won’t move.” |
| Operations | Brand list, warehouse/operator named, inspection protocol, laycan window | Forwarded PDFs and no operator contact |
Why the “we have a Chinese buyer for everything” line means nothing
- Brand acceptance: Not all brands are accepted at all ports. Acceptance lists are contractual, not verbal.
- VAT cash: Import VAT ties up cash on arrival. If you can’t fund it, you can’t clear the cargo.
- Basis risk: LME vs SHFE gaps move daily. Converting exposure needs lines and margin.
- Quotas & timing: Miss a quota window or vessel slot, and your thin spread is gone.
The LME-discount illusion (clean, quick)
| Claim | Reality |
|---|---|
| “We can take the whole Copperbelt at LME-X% CIF.” | CIF loads cost and risk to the seller. Add a discount and no pre-funding and you’ve priced yourself out. |
| “Release warrant, we pay after resale.” | No release without title. No title without cash or a drawable, confirmed instrument. |
| “Risk-free flip, buyer ready.” | If it were risk-free, the financed seller or a tier-1 trader already captured it yesterday. |
What a real first email looks like (copy this if you’re serious)
- Facility: “We offer 20% prepay or LC at sight confirmed by [Bank], draft wording attached.”
- Product: “Grade A, acceptable brands: [list]. Target locations: [ports/warehouses].”
- Terms: “CFR/CIF/FOB [choose], inspection by [SGS/Intertek], laycan [dates].”
- Risk: “Hedge policy and limits attached. SHFE conversion lines in place.”
- KYC: “Corporate pack and signatories attached. Decision-maker on copy.”
Red-flag signals we decline on sight
| Phrase | Interpretation |
|---|---|
| “Buyer can take unlimited quantities.” | No allocation discipline, no finance. Real buyers state volumes, tenors, and credit capacity. |
| “CIF at a discount, payment from proceeds.” | Asks seller to fund freight and give margin. Declined immediately. |
| “Release the WR first.” | Requests title without consideration. Not how warrants work. |
| “We’ll show proof of funds after SPA.” | Backwards. Funding evidence precedes paper. |
| “We don’t need hedging.” | No risk control. Not a buyer. |
PXF: Pre-export finance. Lenders get paid first from exports. Warrant/WR: Warehouse title; released only against money or drawable paper. LC at sight: Bank pays seller when clean documents are presented. Basis risk: LME vs SHFE price gap you must manage with credit lines.
If you bring capital or clean, confirmable paper—and a workable ops plan—we’ll place you into real copper flows. If you won’t fund production and won’t accept how the chain works, there’s nothing to discuss.
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. Prices, logistics, and availability change with markets. We decline broker chains and any request that assumes risk-free arbitrage without funding.
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