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Insight

Understanding the Commodities Market

Mon, 10/21/2013 - 14:30

Commodity trading services are an interesting option for metallic mineral suppliers looking to place their raw materials in hands of buyers without further complications. Mining companies are looking for traders that can maximize their product value, minimize their risks, and eliminate logistics challenges. “The commodity market is constantly changing, prices fluctuate, and trading policies are constantly redefined. Mining companies need partners with global networks to keep up with the rapidly shifting market conditions and to react efficiently,” says Raúl Arias, Director General of Traxys, an international provider of financial and logistical solutions for the ferroalloy, mining and energy industries.

The mineral commodity market has seen many changes in the past decade, not only when it comes to price fluctuations but in terms of how business is conducted. Everyday buyers are becoming more strict and selective on the material they purchase. For example, China – where most of the commodities end up – has recently implemented one of the biggest quality control systems, called the “Green Fence” policy, and suspended the import licenses of many international companies. “We have seen how the new Chinese policies are directly influencing the market. During 2013 purchases have decreased considerably, and some suppliers operating in Mexico have shipped 25% to 50% less products than what they shipped last year,” Arias details. This reduction in exports is a result of the unawareness of mineral producers regarding the new conditions being designed on the Asian continent. “Many companies are missing the fact that Indian and Chinese smelters have very high inventories, and have a lot of refined metal available, so now they are able to establish new limitations regarding the quality of the products they buy,” he adds.

“Today everything depends on the specifications of the materials global clients demand and the restriction they impose. Some of them do not want to receive base metal concentrates with high cadmium values, others do not want fluorine. It is a matter of matching the requirements of our buyers with the type of ore our producing customers are offering,” Arias explains. Traxys serves as an agent of mineral producers by representing its clients’ interests from the first customer introduction to the ultimate delivery and execution of the sale. “Dealing with new customers in exotic markets can be culturally and financially challenging. Our clients greatly benefit from our international industry knowhow since we are able to minimize the risk and protect them regardless of the unpredictability of the situation,” says Arias. Traxys coordinates directly with the mineral producing companies to find the most suitable markets for them. The company undertakes all the logistics and fiscal matters to provide a competitive service that ensures the produced minerals are reaching the international clients.