Top

Published in:

2021 | OriginalPaper | Chapter

2. The Global Supply Chain of Commodities

Author : Murad Harasheh

Published in: Global Commodities

Publisher: Springer International Publishing

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

In this chapter, I present how the physical global supply chain is structured. The role of commodity traders in matching buyers and sellers from different parts of the globe. How commodities are transformed in space, time, and shape to meet participants’ needs and make a profit and arbitrage opportunities. Then, how international transactions in commodities trading are financed.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

previous chapter Overview of the Global Physical Commodities

next chapter Risk Management in Global Commodities

In this part, we talk about the direct player in the upstream and the midstream parts of the supply chain.

The American Petroleum Institute gravity, or API gravity, is a measure of how heavy or light a petroleum liquid is compared to water: if its API gravity is greater than 10, it is lighter and floats on water; if less than 10, it is heavier and sinks.

We say free profit because prices after transportation, storage, or transformation are agreed upon previously in bilateral contracts, so that the future payoff from the transaction is guaranteed (certainty-equivalent cash flow).

Here we are presenting a simplified example ignoring the opportunity cost (risk-free) and the convenience yield, we assume they cancel out but later we show more details on this issue.

We refer to the US Dodd-Frank Act (Pub.L. 111–203) of 2010, and in Europe: MiFiD II (Markets in Financial Instruments Directive: Directive 2014/65/EU) and EMIR (European Markets Infrastructure Regulation: Regulation (EU) No 648/2012).

Arezki, R., & Matsumoto, A. (2018). Shifting Commodity Markets in a Globalized World. International Monetary Fund.

Bouchentouf, A. (2007). Commodities for Dummies. Wiley Publishing, Inc.

International Chamber of Commerce Banking Commission. 2017. 2017 Rethinking Trade & Finance. Paris. https://cdn.iccwbo.org/content/uploads/sites/3/2017/06/2017-rethinking-trade-finance.pdf (July 9, 2020).

Kouladis, Nicholas. 2006. Principles of Law Relating to International Trade Principles of Law Relating to International Trade. Springer US. https://link.springer.com/book/10.1007%2F0-387-30699-4 (November 9, 2020).

Trafigura. 2019. Commodities Demystified A Guide To Trading And The Global Supply Chain Second Edition. https://www.commoditiesdemystified.info/pdf/CommoditiesDemystified-en.pdf (July 9, 2020).

Title: The Global Supply Chain of Commodities
Author: Murad Harasheh
Publisher: Springer International Publishing
Book: Global Commodities
Print ISBN: 978-3-030-64025-5

Electronic ISBN: 978-3-030-64026-2

Copyright Year: 2021
DOI: https://doi.org/10.1007/978-3-030-64026-2_2