Payment terms that actually close copper deals

Ask anyone who has tried to close a copper deal what went wrong, and the answer is usually payment. The seller wants security before goods leave their control. The buyer wants to inspect before money leaves theirs. Both are reasonable. The structures below are how real deals bridge that gap.

Structures that work

Payment by bank transfer after inspection in a bonded warehouse. The seller delivers into a warehouse the buyer trusts. The buyer's inspector checks the lot. The buyer pays, and the warehouse transfers the goods. Common for trials and smaller lots. Works only if the transfer of control happens at the same step as payment. See test-and-pay.

Documentary letter of credit (DLC, MT700) at sight. The buyer's bank promises to pay the seller when the seller presents the documents listed in the credit: invoice, inspection certificate, bill of lading or warehouse documents. The standard for contracts once trust exists. See letters of credit.

Standby letter of credit (SBLC, MT760). A bank guarantee that pays if the buyer doesn't. Often used for running contracts where each shipment is paid by transfer and the SBLC sits behind them as security.

Partial advance, balance after inspection. The buyer pays part in advance, often to fund export costs, and the rest after inspection. Works when the buyer has already checked the seller well and the advance is small.

Escrow with an independent agent. The buyer pays into an escrow account with a regulated third party, which releases funds when agreed conditions are met. Copper Supply does not offer escrow and never holds trade money.

Pre-finance to a producer. A financier or buyer funds production in return for offtake. Serious due diligence on the producer is essential.

Terms that almost never work

• CIF destination with 100% payment after arrival and inspection. The seller carries all the risk across an ocean.
• Payment against a draft bill of lading or a "past" document.
• Upfront fees for bonds, release or certificates. See upfront fee scams.
• Terms that change every few days. If a counterparty switches from letter of credit to transfer to "after delivery" in a week, they don't have the capacity they claim.

A real exchange (names removed)

A buyer asked for cathode CIF China, paid by transfer after inspection at destination. Asked how long he had been looking for a seller on those terms, he said a month. Three days later he mentioned a friend who could sell at a good price, but "only against a letter of credit". His own buyer wouldn't open one. He was looking for a seller to carry all the risk, and there wasn't one.

Choosing a structure

• First deal with a new counterparty: small trial, pay after inspection in a neutral warehouse.
• Running contract: letter of credit or SBLC, with inspection at loading.
• Whatever you choose, write it into the contract and don't change it without a signed amendment.

Every listing on Copper Supply states its payment terms up front, so you can filter for counterparties whose terms match yours before you start talking.