How about some FREE CASH in bunkering ?
On previous article <Beware of the sneeze…. (not the one beside you )>, I have mentioned a trading technique commonly used by trader to get credit from physical supplier. Its also a win-win strategy for physical supplier to have financing and counter credit risk, Later I received some questions on could i give some further discussion.
To give a simple analogy, we have a common friend David. David ask you to lend him 10USD . He promise he will pay you back 15USD in a month. You think about it and decide “MEH”. Then you turn to me and say , “how about i lend you USD10, you can lend to David and after a month, he will pay you USD15, but you just need to pay me USD12 !. WOW USD3 free profit !! Of course as a money loving Asian i scream “YES” harder than a porn star.I take your USD10 and give to David and await for my free profit.
Of course, There ain’t no such thing as a free lunch. If David fail to pay me back USD15 or ANYTHING in a month , I still have to pay you back USD12 no matter what. There are cases like this in Singapore high court that sleeving go wrong and the middle man try to walk way from the arrangement and act like they never get involved. Yet at the end they have to pay.
As a purchaser , you might never know what arrangement between the trader and supplier. Counterparty risk should always be considered when choosing your purchasing channel. Be extra cautious in the time of risk !
Until next time
Suggested reading : https://www.supremecourt.gov.sg/docs/default-source/module-document/judgement/-2016-sghc-62-revised-pdf.pdf
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