Do you personally know this friend from another country, or is this someone you have met, and spoken with, only via the internet?
In what country does the company generating the
scrap metal, located in?
When referring to the material, it's usually referred to as HMS #1 or HMS 1, 2 etc. Depending on what form the iron is in, and what it's qualities are.
In all the time I spent in International Trade, I never came into contact with anyone who was selling HMS by GT, it was almost always MT or if not KG. GT can mean two different things, it could mean "
Gross Ton" in reference to "Long Ton". Or it could be referring to ship measurements in that they measure the capacity of a ships hold in GT, not MT.
Long Ton = 2240 lbs
Metric Ton = 2000
If the entity that is selling the HMS is selling by the Long Ton or Gross Ton however they want to describe it, this might be the reason they seem to be being paid more because there is actually more of it than a MT which is the measurement most commonly used in referring to the weight of HMS for sale.
If you have not met this person, and only know them through the internet or phone conversations, and they are involved in international trade they most likely do not work for the company selling the scrap. Scrap metal companies don't hire people that do not already have prior experience they can apply. Brokers often claim to work for a company, or to be the sellers mandate etc in order to make themselves seem more legit. Because this particular person is referring to the scrap as #! HMS, and because they are using a unit of measurement that the industry does not use to sell quantities of HMS scrap, I agree with what you have previously said, that they do not have experience in this field. Furthermore, this throws up red flags so far as I am concerned, and would lead me to believe this is a person who does not only not understand the market, but has no experience with conducting these types of transactions. This is not someone you want to do business with. It sounds like a broker to me.
But not all is lost, if this is in fact a broker, and not a personal friend you have known in real life over a length of time, you can instead of dealing with them, sign a broker agreement that would be included in the letter of credit documents a bank would issue so that they were guaranteed to be paid out a specific monetary compensation, per lb. Because he is claiming to represent the buyer, this really should come from the sale side of the transaction, but because he's probably just a broker, he probably does not have direct access to the seller, and thus you need to get him out of the way by agreeing to this broker fee so you can get to the real seller.
I sometimes encountered broker chains that seemed endless, and sometimes would create a huge circle of brokers that ended with one of the original ones. Brokers post these types of transactions, others pick them up and then offer them again, and during these offers the price is changed, or some other information to make the transaction seem more profitable, then the original broker picks it up as a new offer and passes it along again in an endless circle of shady offers. I learned fast to ignore any offer where the broker was not either directly talking with the company, or not working for whoever it was directly talking with the company. You will waste all your time trying to make something happen, and never get anywhere. So if there are brokers in the middle of the transaction, you need to sign a brokers agreement and get them out of the way.
Also, if this is an international transaction, you need to ensure it's being conducted in the way the International Chamber of Commerce, or ICC and the world trade bank you are doing business with lays out how it should be done. You need to issue a letter of credit against their proof of product, and these things are conducted strictly by bank to bank confirmation. If someone is offering you "POP" or "Proof of Product" against a "LOC" or "Letter of Credit" or the other forms of a letter of credit like a "Confirmed Letter of Credit, Transferable Letter of Credit, Non Revocable Letter of Credit, Revolving Letter of Credit, or even a Confirmed Non Revocable Transferable Revolving Letter of Credit" it should be done by bank to bank, not person to person or buyer to broker, etc. What some brokers do is ask for a copy of a LOC, and then use that to secure another deal where some other broker is requesting a copy of an LOC. Another trick, specially in West African nations, is to use a bank set up for the purpose of only scamming, that shows a fake POP, the bank exchange of information is legit, but the information is not. Once they get the letter of credit and lock it up, they can then submit the letter of credit to another banking institution and either factor it, as it's not confirmed and secured, or take a loan out against it. All these things commonly happen are all things that can be avoided if you understand the market and what you are doing.
I am giving you a lot of information that took me years to learn myself, but there is far more when attempting to conduct an international trade deal that I haven't stated. I'm not sure if this is the type of transaction you are asking about, so I'll reserve blabbing more about it until you can clarify.
So far as the price for HMS is concerned, it varies greatly, in some places of the world, you can purchase it for $150-$200 per MT. In other places of the world it might cost almost $400 per MT. There are so many factors that determine prices that you need to be exceedingly careful and understand the transportation and market value before you commit to any contract. If your friend is telling you the truth and just using incorrect terms, the reason why the company upset, and the reason the buyer is bulking at buying, and the reason there isn't a contract in place is because the metals market right now is very volatile. Whatever you do, specially if you nor your friend understand the dynamics of the metal markets, do not sign any contracts promising any specific price per MT. Never sign a contract for any length of time promising any specific monetary compensation per MT. What you agree upon is a specific market price, for example I use London Fixed to price Precious Metals, and sell at a discounted percentage against London Fixed, or an increased percentage against London Spot depending upon what form I am selling it in. There are similar market indicators for scrap HMS as well. Your agreement, if you do end up signing any contract, should be in a specific percentage of the market pricing that currently prevail.
In my humble opinion, and taking what you have stated strictly at truth value, and based only on the little bit of information you have posted, I would say that your friend is a broker, or wishes to be and is selling an offer made to him, but not the "sellers mandate" or directly representing the company selling the HMS.
What I would NOT do:
Give any of your personal information, many times people will ask for a passport to "prove" you are a real person
Do not give out your address, drivers license, SS# none of this information is required because all the information for the transaction are conducted bank to bank, and it's the banks that ensure the information.
Do not give out your business information beyond phone number, no paperwork should be required to be sent to your business address, and if you are dealing with scam artists, they will use your information and claim they are you in an attempt to conduct business elsewhere, using your good name.
Do not prove your financial situation to anyone, for the reasons I have posted above and because you don't ever want to give anyone your personal financial information under any circumstances unless they are a bank, your CPA, accountant, etc you get the idea.
I could probably say a lot more, and will if you post more information. I may have over posted on this thread, but my concern when I read the terms #1 HMS and GT threw up all kinds of red flags in my mind, and I hate hate hate hearing about people getting burned on international transactions. I spent many many years in this arena and have personally seen so many scams and bogus offers that I could probably write a book, or several books on the subject.
One last note, the link I am going to provide right under this is to a trade site, probably the most reputable and populated on the internet. Yet I can almost guarantee that the majority of the offers are not real, even the ones that are "confirmed" are more than likely not real. Only the company is confirmed, not the transaction.
These are offers on HMS 1,2 currently being offered on alibaba:
Hms 1-Hms 1 Manufacturers, Suppliers and Exporters on Alibaba.comSteel Scrap
Scott
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Originally Posted by bigdog72
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