Why cant he just made USD 1 profit ?
Few months ago there is a anonymous letter from a bunker trader , pointing that “Its radicicols for bunker trader to earn USD1/MTD for all stem !! Even for client who is paying late. They claim that its dangerous for the whole industry. So how much margin is considered “suitable” in bunker trading ?
The short answer is “WHO KNOW “.
The reason is simple, market will determine what is the possible profit margin can be earned in a trade. Imagine the supplier quoting same price to 4 traders, one add USD1, one add USD5, one add USD10 and another add USD 0.5 . Its easy for the buyer to justify why they choose USD1 over USD0.5 due to personal relationship, reciprocity for previous discounted deal or less counter party risk ( the trader who earn 0.5 is perceived more financial risky in the first place “. However its harder for him to explain choosing the one with margin USD10 to USD 1 to the management on why they want to pay USD9/MT more for the same requirement which supply by same supplier and same credit terms.
I understand the frustration form that trader, maybe there are margin requirement from his company, maybe he work really hard and finally get an enquiry and lost at USD0.5 for a client which pay 90days. However its a free market and you cant control what your competitors are doing.
Things are more straightforward compare to physical supplier as client might suffer from quantity / quality dispute when a physical supplier quote a big different with other suppliers. However in case of bunker trading, as long as they quote the same supplier, same credit terms, the only consideration is the price and a slight proportion of counter party risk.
Until next time
