The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success
  • Please Leave the Politics to CNN and FOX.
    Just a reminder that political topics/memes are prohibited, unless discussed within the realm of business and investment, for example, the impact the new Treasury Secretary might have with BTC. Please help keep the forum free of politics. (And I promise to do better myself!)
  • Join 60,000+ entrepreneurs who are earning their freedom and living their dream.

    "Fastlane" is an entrepreneur discussion forum based on The C.E.N.T.S Framework outlined in the two best-selling books by MJ DeMarco (The Millionaire Fastlane and UNSCRIPTED®). From multimillionaires to digital nomads to side hustlers who are grinding a job, the Fastlane Forum features real entrepreneurs creating real businesses with one goal in mind: Freedom— both financial and temporal.

    Download (Unscripted) Download (Millionaire Fastlane) Register
    Registering for the forum removes this block.

Selling/Brokering Commodities Globally

Remove ads while supporting the Unscripted philosophy...become an INSIDER.

Tahoma

New Contributor
Dec 11, 2016
3
2
16
48
Hi, Fast Laners

I have a good relationship with an individual who operates a mine in another country (outside of the USA). He would like me to help sell his ore to buyers around the world. I don't know much about commodities trading or brokering, and it is difficult to find out complete information for doing so on the Internet. My understanding is that there are a lot of shady dealers and that people in poor countries often get cheated, which is why they want to work with me--they trust me. Also, I trust them.

Is there anyplace I can find out about (for beginners) being a commodities trader? Is it possible to simply broker the deal between buyer and seller? If both are overseas (buyer and seller), what are the rules and regulations governing my activities (e.g. is there licensing involved)?

There are some B2B sites like TradeKey, WorldTrade, and EC21. Has anyone successfully used these to sell commodities?

Thank you for any information.
 

Don't like ads? Remove them while supporting the forum. Subscribe.

Kak

Legendary Contributor
EPIC CONTRIBUTOR
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Jan 23, 2011
6,776
29,638
4,554
Hi @Tahoma

I have worked in commodity chemicals, but our business primarily deals in our own proprietary blends right now. The commodity stuff, for me at least, has always just been the "good old boys club" type of deal someone knew someone and we put a deal together on contract for a long time. OK margins at best, but the value is in the fact that it just goes forever. They are not company builder deals, but they are bill paying.

Is it possible to broker a sale between a buyer and a seller? Yes. Absolutely.

I would say it is better to put your own financing and transportation together and bill the customer yourself. I would want to be the only connection between the two companies or they can cut you out.

Bottom line with a commodity, if you can get product under market, you can get business. If you are one penny over market, your supplier is useless. Also with razor thin margins on commodities, transportation costs are a HUGE decider of profitability. It is often more profitable to sell as near the source as possible to minimize these costs.

I don't know what you are selling, but if there is someone also mining for it and selling it closer to your intended customer, they will probably be able to undercut you profitably.

My advice is to see what kind of quotes you can get on material do some research on how competitive that is and how much room there is for you.
 
Last edited:

Tahoma

New Contributor
Dec 11, 2016
3
2
16
48
Hi @Tahoma

I have worked in commodity chemicals, but our business primarily deals in our own proprietary blends right now. The commodity stuff, for me at least, has always just been the "good old boys club" type of deal someone knew someone and we put a deal together on contract for a long time. OK margins at best, but the value is in the fact that it just goes forever. They are not company builder deals, but they are bill paying.

Is it possible to broker a sale between a buyer and a seller? Yes. Absolutely.

I would say it is better to put your own financing and transportation together and bill the customer yourself. I would want to be the only connection between the two companies or they can cut you out.

Bottom line with a commodity, if you can get product under market, you can get business. If you are one penny over market, your supplier is useless. Also with razor thin margins on commodities, transportation costs are a HUGE decider of profitability. It is often more profitable to sell as near the source as possible to minimize these costs.

I don't know what you are selling, but if there is someone also mining for it and selling it closer to your intended customer, they will probably be able to undercut you profitably.

My advice is to see what kind of quotes you can get on material do some research on how competitive that is and how much room there is for you.


Thank you for the information. This is helping to crystallize my understanding.

Some details:
  • I know the mine owner. The mine is in a country fairly close to the likely destination country. Shipping would not likely be the deciding factor.
  • The ore of good quality and is in very high demand.
  • The price I was quoted for the ore per MT is less than what I see quoted on TradeKey, WorldTrade, and EC21, and other commodity buying/selling sites. I don't know how well those actually reflect the prices of the ore, but if they are accurate, the I have a good margin.
  • The mine owner does not do the transactions himself because he is concerned about getting an order, shipping it, and then having the seller renege on the payment. This has not happened to him, but to other miners he knows. The mine owners and operators are not sophisticated people and they do not speak English. They are concerned with being taken advantage of as described.
  • I do not have a customer yet, but I see many interested buyers on the sites (TradeKey, WorldTrade, and EC21). Have you worked with these sites?
  • The orders are between 5000MT/mth and 200,000MT/mth. Quite large.
I don't have a good grasp of how a large international transaction like this takes place, and how to guarantee buyer payment.

Some questions:
  • Is it typical for a buyer to pay the reseller (myself) and the reseller to then purchase the ore and arrange for the shipping? This would be the ideal arrangement for me.
  • Or is it more expected that the reseller (myself) would finance the purchase of the ore and then resell it to the end customer? Much riskier for the seller.
  • Given the international boundaries, the shady practices described, the large quantities, and the shipping times, I would think the risks of losing money on any arrangement are quite high. How to mitigate those risks; is there an escrow system for these types of payments?
  • I'm not willing to set it in motion without guaranteed payment, and the buyer is unlikely to pay me without the cargo already at his port. What is the way this normally happens?

Thank you again for your information
 

Sponsored Offers

  • Sticky
MARKETPLACE Fox Web School "Legend" Group Coaching Program 2021
Yeah, your youtube channel is incredible and all the videos I have seen so far are really great...
  • Sticky
FEATURED! Introducing... WEALTH EXPO$ED, A Short Story By MJ DeMarco
Finally! I just launched a short story on Kindle (FREE if you have Kindle Unlimited)! After...
  • Sticky
MARKETPLACE You Are One Call Away From Living Your Dream Life - LightHouse’s Accountability Program ⚡
I planned to make a separate post for this video but it is useful here as well for anyone...
  • Sticky
MARKETPLACE Lex DeVille's - Advanced Freelance Udemy Courses!
Last promo of the year.. Get the training you need now or miss it. Promo Code: FINALHOUR...
  • Sticky
MARKETPLACE Kill Bigger Incubator
UPDATED POST: Hey Guys! I wanted to give a quick update on what this program has become. In...
  • Sticky
MARKETPLACE Grow Your Business With a Book (An Unorthodox Marketing Strategy That Built One of the Largest...
Are you looking for a new, lesser-known but potentially very lucrative source of leads to your...



Forum Sponsor

sponsor

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Monthly conference calls with doers
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom