Commodity Trade — Frequently Asked Questions

EN590 trading follows a 7-step process: (1) Buyer issues an ICPO specifying EN590 10ppm grade, volume, price basis, and delivery terms. (2) Seller responds with an FCO or RWA confirming product availability and storage terminal. (3) Both parties execute an SPA (Sales and Purchase Agreement). (4) Buyer opens a DLC via SWIFT MT700 or SBLC via MT760. (5) Independent inspector (SGS or Intertek) verifies quality and quantity at the loading terminal. (6) Product is loaded; the carrier issues the Bill of Lading. (7) Seller presents shipping documents to the bank; payment is released. The entire process from ICPO to first delivery typically takes 21–45 days.

EN590 refers to the European standard EN 590:2013+A1:2017 for automotive diesel fuel. The 10ppm grade (ULSD) has: sulphur max 10 mg/kg, cetane number min 51, density at 15°C 820–845 kg/m³, flash point min 55°C, viscosity at 40°C 2.0–4.5 mm²/s, and FAME content max 7.0% v/v. This is the standard for Euro 5 and Euro 6 compliant vehicles.

The minimum practical cargo size for international EN590 trade is 25,000 MT (metric tonnes), representing approximately one Handysize tanker. The Rotterdam spot market standard lot is 25,000–50,000 MT. Smaller volumes below 5,000 MT are typically supplied by local distributors, not traded internationally.

EN590 is priced in two ways: (1) Absolute price — USD per metric tonne ($/MT), agreed for a specific delivery window; (2) Differential to Platts benchmark — expressed as ±$/MT versus the Platts CIF NWE Cargoes ULSD 10ppm assessment. Most long-term contracts use the Platts differential to account for daily market movements. Rotterdam FOB is the primary reference for European trade.

10ppm means the maximum sulphur content is 10 parts per million (10 mg/kg). This ultra-low sulphur diesel (ULSD) formulation is required for Euro 5 and Euro 6 emission standards across the EU and EEA. The 10ppm standard reduces particulate emissions, protects diesel particulate filters (DPF), and is mandatory for all road vehicles sold in Europe since 2009.

A complete Jet A-1 transaction requires: ICPO (buyer), FCO/RWA (seller), Sales and Purchase Agreement, SBLC (MT760) or DLC (MT700), Certificate of Quality confirming DEF STAN 91-091 / ASTM D1655 Grade A-1 compliance, JFTOT test results (thermal stability at 260°C), antistatic additive certificate (Stadis 450 or equivalent), Certificate of Quantity (ullage report), Certificate of Origin, Bill of Lading, and commercial invoice. Into-plane delivery additionally requires Aviation Authority Approval and chain-of-custody documentation.

The main difference is freeze point: Jet A-1 has a maximum freeze point of −47°C, while Jet A has −40°C. Jet A-1 is the international standard (used everywhere except North America); Jet A is the US domestic standard. Both meet ASTM D1655 but to different freeze point grades. For polar routes and high-altitude operations, the −47°C freeze point of Jet A-1 is critical for safety.

JFTOT (Jet Fuel Thermal Oxidation Tester) measures the thermal stability of aviation fuel when heated to 260°C. It assesses whether fuel will form deposits in aircraft fuel system components under high-temperature conditions. JFTOT is a mandatory test under DEF STAN 91-091 and ASTM D1655 — any failure disqualifies the batch from aviation use. Results must accompany every Jet A-1 cargo.

Jet A-1 is priced primarily against the Platts Jet A-1 CIF NWE (Cost, Insurance, Freight Northwest Europe) or Platts FOB Rotterdam assessment (code PJABA00). It is expressed as a crack spread over Brent crude. The Jet/ULSD spread reflects seasonal demand — jet crack spreads widen in summer travel season and compress in winter. The Singapore Jet A-1 FOB assessment is the Asian benchmark.

A soft probe is an informal, non-binding inquiry sent to test a potential counterparty's interest, pricing, and product availability — without any legal commitment. It precedes formal documents like the LOI or ICPO. In petroleum markets (EN590, Jet A-1, D2), soft probes are frequently abused by broker chains: intermediaries pass the same inquiry along a chain of 5–10 brokers, each adding commission markup, without any real product behind it. A legitimate seller will respond to a soft probe with an FCO that includes a specific tank terminal reference.

Verification steps for a commodity supplier: (1) Confirm company registration with the national registry (Companies House, ACRA, HKEX, etc.). (2) Verify VAT/tax registration. (3) Request an independently verifiable tank storage agreement from a named terminal (Vopak, Koole, Evos, etc.) and contact the terminal directly. (4) Check for active SGS or Intertek inspection contracts. (5) Request a Certificate of Product (CoP) from the named refinery. (6) Verify the signatory's authority with the company directly. (7) Use a KYC-verified platform like Skyra CIP where all participants are pre-vetted.

The most prevalent commodity trade scams are: (1) Broker chain fraud — 5–10 intermediaries without real product; (2) Advance fee fraud — demanding 'inspection fees', 'transfer taxes' or 'connection fees' before delivery; (3) Phantom product — claiming storage of product that does not exist; (4) Document forgery — fake SGS certificates, fake Bills of Lading; (5) SBLC leasing scams — selling fake standby letters of credit; (6) Identity fraud — impersonating major oil companies or banks. The common thread: any request for upfront payment before verified product inspection is a red flag.

A broker chain is a sequence of intermediaries between a buyer and a real product source. Each broker adds a commission (typically 1–3%) and passes documents along the chain. In legitimate trade, one or two trusted brokers may add value through relationship access. In fraudulent trade, chains of 5–15 brokers exist with no product behind them — each layer believes they represent the next layer's buyer or seller. Broker chains are the primary mechanism for EN590 and petroleum trading fraud.

A Documentary Letter of Credit (DLC, MT700) is the primary payment method — it is triggered by presentation of compliant shipping documents (Bill of Lading, Certificate of Quality, invoice). An SBLC (Standby Letter of Credit, MT760) is a payment guarantee — it is only drawn if the buyer fails to pay under the primary contract. DLCs are used as the main payment mechanism; SBLCs are used as security/fallback. For first-time trades, sellers often request an SBLC in addition to the DLC for extra security.

MT760 is the SWIFT message type used to transmit an SBLC (Standby Letter of Credit) from the issuing bank to the receiving bank. When commodity contracts specify 'SBLC MT760', it means the standby LC will be delivered via the SWIFT interbank messaging network. MT760 provides irrevocable bank-to-bank confirmation that the guarantee is in place. The counterpart for documentary letters of credit is MT700.

MT103 is the SWIFT message type for a single customer credit transfer — essentially a bank wire transfer. In commodity trade, MT103 is used for: advance payments or deposits on agreed terms, settlement of smaller spot transactions, and payment of balance amounts in partial payment structures. Unlike an LC (MT700) or SBLC (MT760), MT103 does not provide payment security — funds transfer directly. It is only appropriate for established trading relationships with strong mutual trust.

FOB (Free On Board) is an Incoterm where the seller's responsibility ends when the goods are loaded onto the vessel at the named port of loading. The buyer arranges and pays for ocean freight, marine insurance, and all costs from the loading port onwards. In petroleum trade, FOB Rotterdam is the standard European pricing benchmark — the seller loads at Rotterdam, and the buyer arranges the voyage.

CIF (Cost, Insurance and Freight) means the seller pays for the ocean freight and marine insurance to deliver goods to the named destination port. Risk transfers to the buyer when the goods are loaded on the vessel at the origin port — even though the seller has paid for the voyage. CIF Singapore is the standard benchmark for Asian petroleum imports. CIF is simpler for buyers who lack established shipping relationships.

SGS inspection refers to an independent quality and quantity verification conducted by SGS (Société Générale de Surveillance), one of the world's leading inspection companies. In commodity trade, an 'SGS inspection' typically involves: testing product against the contract specification (CoQ), measuring loaded quantity via ullage survey (tank dip measurements before and after loading), and issuing official certificates accepted globally by banks, customs authorities, and buyers. SGS, Intertek, and Bureau Veritas are the three inspectors acceptable to most commodity contracts.

Skyra CIP (Commodity Intelligence Platform) is a closed, KYC-verified B2B marketplace for bulk commodity trade. Every participant — buyer, seller, and broker — undergoes a full KYC (Know Your Customer) and due diligence process before accessing the platform. This eliminates the broker chain fraud problem endemic in petroleum markets. Skyra CIP facilitates direct deals between verified parties in EN590, Jet A-1, bunker fuel, crude oil, metals, steel, and bitumen.

KYC (Know Your Customer) in commodity trading platforms involves verifying: (1) Company registration and corporate structure; (2) Directors' identification and address verification; (3) Source of funds declaration; (4) Business activity and trade history; (5) Sanctions screening (OFAC, EU, UN lists); (6) PEP (Politically Exposed Person) checks. On Skyra CIP, KYC is completed before any participant can send or receive deal flow, eliminating fraudulent intermediaries from the network.