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Intermediary buying and selling doctrine

FTN EXPORTING (FTNX)

Intermediaries, Brokers and Agents

International Trade Educational Service  

Last Update: 7 August 2022


FORMULATIONS: Some  aspects taken from ( in short form) COSI 


After the first year of study and trading the PCT should move into trading at the higher advance level which include trading in more complex items such as Petroleum Based Products (PBP). At first the PCT trades using a fixed prices basis ; that is, the PCT secure the goods from a  RWA supplier  at a set price and sells such goods at a set price.  After the first year the PCT can commence delving in variable and  semi fixed mitigated price basis as well. Below page offer insights to do with prices basis, measurements, process and the likes that the informed PCT should learn to apply as they commence trading  in more sophisticated  commodities such as crude oil, refined fuels fuel feedstock, ores and coal. Variable price basis can be used when fixed price commodities are not available, especially those already mentioned. Countries bearing sanctions or have  no SWIFT services cannot participate is such price basis.Advice herein is only suitable for use by the  informed PCT who have studied our doctrine.


FIXED PRICE BASIS EXAMPLE  FOB 

FIXED PRICE BASIS EXAMPLE FOB 

Product offered by supplier to PCT  MT at : USD$ 200.00 MT

PCT adds 7.5% Operating Expenses (OPX) :US$ 15.00 per MT

PCT offer goods to a potential end buyer at FOB = US$ 215.00 MT FOB

Product  and offer by supplier to PCT  MT commences at : USD$ 200.00 MT

Less US$ 30.00 per MT  FIXED Discount  as agreed upon by tracking a SPOT index

PCT adds 8.0% (OPX) to discounted monthly spot price: i.e: US$ 170 +13.60

PCT offer goods to a potential end buyer in that month  at FOB = US$ 183.60 MT FOB

FIXED PRICE BASIS FCA

USA  CONVERSION BLOWN BARREL (BBL)

TOTAL FCL Value US$ 160,000,00 : FCA FCL 20 FT

OPX ADD 12.0%=US$ 19,200.00 FCL FCA

Sell Price by PCT=179,200.00 FCL FCA


Example: 2 MT bags Harcourt dried beans : 10 bags will fit into a 20ft  FCL= Dense Product 

Example :Non dense light in weight products taking up volume:40 Ft FCL is a better choice 

1 AMERICAN BBL =

9.702 CU IN

34.9276 IMPERIAL GALLONS

158.99 LITRES

5.6146 CU FT

42 US GALLONS

DIESEL OIL GRAVITY IS  0.82 TO 0.92 RANGE  

GAS OIL  AT 0.82 UP TO  0.90

SEMI FIXED MITIGATED PRICE BASIS

DLC PAYMENTS END BUYER TO PCT (SELLER)

Product Being Sourced: Qua Iboe Nigeria 

API at: 36 degrees

Sulphur at :1.0%

BBL to MT Conversion Factor: 7.45 Bbl = 1 MT

Index selected by PCT: Dubai Platt’s as found via website www.cmegroup.com

PRICE AS TAKEN: 15 Nov 12.01 PM AEST 

First Payment lodged 15 December 2022 for first delivery 15 Jan 2023.

Less Discount : 4.66% 

Price payable  in first shipment in advance 30 days prior to first delivery date  there after 

Next price taken as payable for second shipment, when first delivery date is realised 

Payment sequence follows accordingly 

First Delivery: Payment made  15 Dec 2022 for delivery 15 Jan 2023 

Second delivery:Payment made 15 Jan 2023 for Delivery 15 Feb 2023 

Third  delivery :payments made  15 Feb 2023 for delivery  15 March 2023 etc.etc.

Price payable by buyer (PCT) to Supplier  as per  agreed upon Index used less discount  monthly

As per each delivery: 15th day of each month

Mitigation factor: Upon date of delivery price exceeds per BBL by:  US$ 10.01 or more 

Buyer agrees to apply new price basis and price payable as per sequence formulated  herein 

Should price fall by US$10.01 or more, new price basis applies.

Price remains  within first delivery  range if mitigation factor not breached in any given month.

DLC PAYMENTS:END BUYER BUYING FROM FTNX(PCT)

All payments for purchase of goods from FTNX  (PCT) are conducted as per ICC UCP banking rules

All  delivery terms attached to the DLC  follow ICC Incoterms rules in  the matter of expenses. 

NO SLC/SLBC  allowed for payment of goods purchased from FTNX which is an incorrect and  risk laden (very risky for the end buyer)  instrument  for the nature of business being conducted.All Payments are by DLC ( this is the correct instrument) as advised from a top 200 ranked  bank of the world, otherwise the DLC must be confirmed. NOTE: Until further notice  all DLC’s from China  MUST be issued as confirmed (as  from the I July 2022), as confirmed  by another bank outside  China not bearing sanctions with USA. Also note a buyer cannot buy goods from FTNX if  they are un-able to apply payment via SWIFT.  Buyers from countries bearing sanctions with USA, UK, Canada  and or Australia will not be  entertained as a matter of law. All goods are sold  at sight of statutory documents in accordance with Incoterms rules used in matters of expenses. A DLC will be collected upon when  all the required documents have been delivered complying as per ICC UCP rules and URC collection rules as it relates to clean presentation. FTNX uses the rules and laws  of commerce and International Trade a strictly applied manner to ensure all the features and added securities related to the financial instrument remain intact. An  end buyer who is unable to advise a DLC, 30 days before first delivery or more  ( as per contract)  should not contact FTNX  to purchase or source wanted goods. FTNX is a Professional Commodity Trader (PCT) and leading educator world wide. We do not own the goods we sell.FTNX is not an ill-informed  intermediary, but a buyer of export ready goods from a secured supplier and seller  of all secured  export ready goods to ONLY the end buyers  we deal with. FTNX is not legally  obligated to discloses such entities as a condition of doing business, as such FTNX is acting as a buyer or seller  on belief of  undisclosed principals .FTNX also bears consequences and liabilities of its own actions.. As it applies to FTNX so does it apply to all USCT members conducting similar business as endorsed under TRIBE Rules of Association.(TRA)A.  DLC cannot be used as cash or security and carries no worth  to the PCT unless all the required terms and conditions of the credit have been met to which the DLC then becomes valuable as it applies to a PCT. Such aspect  applies to a bank advising a DLC in that - A bank  under UCP rules will not accept a DLC as security on a back to back transaction.  

CONVERTING API TO MT

FUEL CONVERSION FACTOR 

(API)……Gravity=BBLS

30………….0.876=7.19 BBLS

31………….0.871=7.24 BBLS

32………….0.865=7.28 BBLS

33………….0.86 =7.33 BBLS

34………….0.855=7.37 BBLS

35………….0.85=7.42 BBLS

36………….0.845= 7.46 BBLS

37………….0.84 =7.51 BBLS

38………….0.835=7.55 BBLS

39………….0.83 =7.6 BBLS

40………….0.825=7.64 BBLS

Blended products are averaged

BRENT=7.598 BBLS = 1 MT

DUBAI=7.323 BBLS = 1 MT

OMAN=7.75 BBLS =1MT

When a specific conversion factor are needed PBP

LNG: BBL TO MT = BBL X 0.086 = Tonnes( MT)

LNG TONNES to BBL=MT X11.60

GASOLINE:BBL to MT=BBL X 0.120

GASOLINE: MT to BBL=MT X 8.35

KEROSENE: MT to BBL=BBL X 0.127

KEROSENE:BBL to MT=MT X 7.88

GAS OIL/D2: BBL to MT=BBL X 0.134

GAS OIL/D2:MT to BBL=MT X 7.46

FUEL OIL:BBL to MT=BBL X 0.157

FUEL OIL:MT to BBL= MT X 6.35

CRUDE OIL: 1 MT=7.33 BBLS

CRUDE OIL: 0.1364 MT =1 BBL

COUNTERTRADE  VIA PCT

TYPES OF DLC ACCEPTED BY A PCT AS PER ICC UCP600

Price and basis of counter goods offered by first supplier is agreed upon via MOU

Price of  counter trade goods is secured by PCT acting as Foreign Trade Negotiator (FTN) 

Commission rate by FTN is declared openly

Goods sought by the first supplier is secured via  usually process  from second supplier by PCT (the buyer)

Goods sought and secured  are converted to value in accordance with first goods offered by supplier 

The PCT must sell the goods as offered by first supplier  ‘as per seller acting for a disclosed  supplier.’

Funds of end buyer are used to buy  goods for the first supplier applying  countertrade

PCT  buys goods sought by the first supplier and delivers them as per delivery mode CFR,CIF or CIP only

PCT pays all delivery expenses on both sides of the transaction.


Process of offer and contract applies to the end buyer  paying for goods under a countertrade

The entity receiving goods  under a countertrade requires an agreement  (MOU) and offer 

Where considerations are in effect (money) a contract is required.No contract is required where no money/payment  changes hand  

As defined on the offer or contract.Buyer may pay for goods with; 

(A) Pre advised  Irrevocable  Documentary Letter of Credit, where a precondition is served first by the Seller  which removes the pre advised status of the credit

(B) Pre advised  Confirmed Irrevocable  Documentary Letter of Credit, where a precondition is served first by the Seller  which removes the pre advised status of the credit 

(C) Irrevocable  Documentary Letter of Credit.

(D) Irrevocable and confirmed Documentary Letter of Credit

(E) Irrevocable and confirmed Documentary Letter of Credit Deferred Payment at 60/90/120 days ( longer the deferment , more expensive the goods become)

(F) In a revolving  transaction the DLC is advised bearing value for the whole contract  as ‘non cumulative’ revolving.

(G) The terms  of the conditions of the credit applies and not the sales contract to do with the purchase of the goods.

(H) Where the BOL is provided under a delivery term ( ICC Incoterms )  A PCT can only provide a more secure albeit  expensive Shipowners Endorsed BOL

(I)  All credits are made transferable  unless agreed upon otherwise. 

(J) A non transferable credit must be advised as confirmed and may attract a higher price for goods.

(K) Unless stayed otherwise on the offer as a matter of added security  the end Buyer pays for the transfer  fee to the bank of the PCT.

(L) The PCT at its discretion may consider rebating the transfer fee after each delivery has been cleared.  


Above DLC many seem the same  but in effect as applied under a current trade , each DLC above are different. A end buyer who is unable to  to secure a DLC from its bank  defines an entity who may not be credit worthy  and has been deemed a high risk applicant. A PCT cannot conduct business with such an entity.

Bit Coins ,cash or personal  cheques cannot be used in a trade deal.(bank endorsed cheques can be used) 


ORTHODOX TRADING PROCEDURES  PCT AND END BUYER

DAP and CIF INCOTERMS Delivery Modes 

Issuance of a  Quote : Not legally binding.A quote is returned to record a confirmation  

Issuance of an Offer: Legally binding unless stated otherwise.

Issuance of the Contract : By PDF and hardcopy  via courier. PDF copy valid once courier receipt is served. 

Buyer advises a bank issued  DLC

Seller upon acceptance of DLC advises P.G 

First delivery  takes place  within 30 days of DLC issuance or as specified on contract

Revolving order: When first delivery completed , price taken for second delivery 30 days later in sequence accordingly  

Transport Documents  in a clean state are presented  for at sight  examination to bank of the end buyer  for collection

Payment is cleared .

Any cash rebates offered by the seller is paid to the buyer at this time (7 days for delivery)  directly to a nominated account served at such a time

When ship arrives at destination port , buyer has 90 days to examine goods for defects

Remedy for verified defects are negotiated upon and settled as agreed on contract.

Revolving transaction; Next shipment delivered etc..etc.. 

Above procedures  represents the safest and strictly applied  process ensuring the interests of the buyer are protected at all times.No other procedures allowed.

All transactions carry a delivery date  from the 15th day of the month or earlier but not later

The 15th day limit ensure no delays are encountered during the Christian festive season of Christmas /New year in any given contracting period.  

 

EXW, DAP  or DAT  delivery terms are not considered by a PCT as securing the required documents for presentation  is not possible.CPT is used  for valuable commodities such as scrap gold.All other delivery modes under ICC  Incoterms considered. Please note  the term ‘delivery’ as defined under Incoterms means delivery of  clean transport documents and not  physical delivery of goods.


Some end buyers  leaving an established supplier (and lax procedures therein),  have the misconception that a seller or supplier  will apply expense of  exporting goods, and loading a ship and sending a ship to another country where goods are unloaded before payment is eventuated as per a past association. No informed supplier  with a sound mind will apply such a process unless there is a payment instrument supporting the  D/P transaction as serviced once the contract is signed. A end buyer wanting to take goods from ship POL and sell such goods, then pay for the goods must still  initiate a  financial instrument when the contract is signed-with a deferred payment (D/P)  aspect. If the end buyer  is unable to sell goods  and earn a GP , payment must still be ensured by its bank when the deferred period expiration date has arrived. 


A buyer rather than an end buyer  wanting to buy goods from a PCT must be able to issue a fresh DLC which is transferable in where the goods will not be endorsed on the BOL under the    ‘Notify party ’aspect .The Buyer may now sell such goods to another party or end buyer. Under this aspect the PCT must ship the goods to the country of the buyer and not to the client of the buyer.


No back to back transaction are allowed nor supported by banks when applying the virtues of a UCP endorsed DLC.

Bank will not accepts a DLC advised form a bank located in a country bearing sanctions with USA or other countries. A PCT could end up being charged with a criminal offence if they trade  with a country bearing sanctions if the country the PCT is situated in has effected such sanctions.

A belligerent China must now issue payments as confirmed by another bank.




TYPE OF OPERATIONAL EXPENSES


A  belligerent China, a war caused by Russia,  and  a Covid 19 Pandemic (again caused by China)  has caused huge delays in matters of supply and delivery  as such as a method to assist the supplier or end buyer  the PCT  is able to apply rebates for certain situation as supported on the offer or contract at the loss of anticipated earnings.


P.G or LDD:  Is offered by the PCT to the end buyer

DEMURRAGE: 50/50 share of demurrage expense port of unloading  as agreed upon  with the PCT and end buyer 

TRANSFER FEE REBATE: As agreed upon the offer with the PCT and end buyer

GOOD SAMARITAN CLAUSE : Allowing the PCT to cancel a contract before a DLC is advised  without penalty if a suspicious even has occurred that may effect the end buyer

Performance Rebate: A cash payment is promised to the supplier if they deliver  ordered goods on time as stated on the offer 

A Promissory Note : An agreed upon rebate is serviced under a promissory note, to a supplier or end buyer as agreed upon prior, out side the bounds of the contract .

CERC: Carbon Emission Rebate  Certificate :Issued By FTNX to the supplier or end buyer(Trading while reducing emissions) which can be cashed in at the agreed value.

A Supplier  or End buyer  may use the services of a PCT as agent  to open a trading account in the country of the PCT 



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|INTERMEDIARIES | |PROCEDURES | |PAYMENTS| |DELIVERY MODES| |The OFFER| |CONTRACT | |FORMULA| |ABOUT DLC| |COMMISSION| |LAWS AND RULES| | PUBLICATION| |CHINA TRADE| |Contact Us| |FAQ (1) 2022| |FAQ (2) 2023| |FAQ (3) 2023| |FTNX Download|