how true is that ?
Many predict in 2020 will be a great time for trader as the credit GAP is getting bigger and bigger , however it’s only part of the picture because
1. Small trader will be suffering
It’s crazy to give a 2 man band trading house a credit jump from a small line like few hundred thousands to millions , we expect to see small trading house suffer from losing medium / big order because the credit from physical supplier is simply not enough and thus they might need to work through other trader , the margin add up might make his offer less competitive and might start a downward business cycle.
2. Relationship between trader / supplier
It’s (one of ) the biggest lie when a trader say “ I am close to ALL supplier in this port .” No, if everyone is your friend means you have NO friend. It will be struggle for some trader if their preferred supplier have limited VLSFO cargo and he has to establish new relationships to another supplier. A relationship can’t build on one day and supplier might have his preferred channel too , that will put the trader who on the “wrong “ side a great disadvantage.
3. HIGHEST risk than ever
In my 12 years of career the highest price of IFO I ever sold I remember is 7xx few years ago , now obviously is not even close (yet) it’s only middle 5xx , however the BDI is Muchhhhhhh higher in that time and consider the profit shipping making its obvious now is much more risky in the business . The risk appetite and ability to take punches will be a big determine factor on whether a trader can stay in the game or not .
Until next time
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