Chapter 05
How a Copper Transaction Actually Closes
A legitimate physical copper deal follows a recognisable sequence of gates. Each gate exists to protect the buyer; skipping gates is how money disappears. The golden rule runs through all of them: documents move before money does.
Working through the gates
- 1LOI / ICPO. You state intent and capacity to buy. Keep it non-binding until you have verified the seller.
- 2SCO (soft offer). The seller responds with product spec, quantity, price basis (usually LME ± a differential) and Incoterms.
- 3KYC & verification. Exchange corporate documents; verify export licences, registration, beneficial owners — and, critically, that the metal exists.
- 4SPA. The Sales & Purchase Agreement fixes Incoterms, the assay/weight regime, penalties, inspection, law and arbitration seat.
- 5Financial instrument. A documentary LC (DLC, MT700) or standby LC (SBLC, MT760) is issued through a reputable bank. This is your protection.
- 6Independent inspection. SGS or Bureau Veritas verify weight and assay at the load port or bonded warehouse, before you release payment.
- 7Shipment. Metal moves by rail/road to port; bill of lading, certificate of origin and packing list are issued.
- 8Payment against documents. The bank pays only when compliant documents are presented. You are paying for proof, not promises.