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Comments (86)

Jul 8, 2020 - 5:12pm
Juicy Elbows, what's your opinion? Comment below:

Thank you for doing this! How did you break into the industry and what is the culture like at your current shop? Are there any specific skills that you would recommend for undergraduates to learn/acquire if they are looking to work in commodities?

Jul 10, 2020 - 7:07am
Jonnysdropgoal2003, what's your opinion? Comment below:

I joined a BB after uni and ended up at their commodities division. My desk was dabbling in LNG so I ended up focusing on it. After a few years, I left to join my current shop - which was for the best I guess as my old BB has now exited commodities so I would have ended up leaving anyway!

Most Helpful
Jul 10, 2020 - 9:00am
Jonnysdropgoal2003, what's your opinion? Comment below:
Juicy Elbows:
Are there any specific skills that you would recommend for undergraduates to learn/acquire if they are looking to work in commodities?

Start with the basics - make sure you have a good grasp of economics and basic macro concepts. On top of that, keep up to date with the industry. I recommend reading the reports issued periodically by the supermajors (Shell's LNG outlook is excellent) and also the major publications that contain 1) the latest news on the industry and 2) an analysis of current trends.

Jul 8, 2020 - 5:24pm
powerforward1, what's your opinion? Comment below:

How is trading physical commodities at a trade house different from trading at a bank or HF?

Idea generation, Lifestyle, comp, personality, stress, etc?

Array
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Jul 10, 2020 - 7:01am
Jonnysdropgoal2003, what's your opinion? Comment below:

Can't comment on hedge funds as I haven't worked in one. Commodities trading at a bank is nowadays focused on paper, not physical (with a few exceptions). It is also much more intense in terms of commitee approvals, risk assessment, etc. This type of scrutiny is also applicable in trading houses (the 'cowboy' image is slightly out-of-date / exaggerated) but on different dimensions factors.

My old boss, who was a big name in the commodities industry, used to say that if you like poker you should trade financial and if you like chess you should trade physical! He was being somewhat facetious but you get the sentiment.

Comp level is the same as other energy products, so it is very dependent on group/trader/year in question. I enjoy the lifestyle. It's hard work and there have been times I have been up all night (pretending to sleep but then checking my phone every hour) on trades I have placed in Asia, but as you become more senior you learn to manage that. I don't bite that our industry is exceptionally stressful. All high-pressured jobs (finance, law, consulting, etc.) are stressful and it is up to the individul to handle it so that it doesn't kill him/her.

Jul 8, 2020 - 6:15pm
nattyphizz, what's your opinion? Comment below:

With US LNG - are you more involved in trading HH now ?

What are your thoughts on the interconnectedness of global gas markets now. I think the events this summer has gotten everyone thinking about this.

Any thoughts on Asian demand? storage?

Winter will be interesting as the HH + Shipping / TTF spread looks pretty tight.

Jul 10, 2020 - 5:55am
Jonnysdropgoal2003, what's your opinion? Comment below:
nattyphizz:
With US LNG - are you more involved in trading HH now ?

HH, JMK, TTF. With futures open interest at insane levels, hedging has shot up. Argubably the latter two are in prime spot to be the world's benchmark on the commodity.

nattyphizz:
What are your thoughts on the interconnectedness of global gas markets now. I think the events this summer has gotten everyone thinking about this.

Interesting question. LNG has been / is being liberalised as an industry, meaning it's no longer regionally priced but issubject to global pricing (which is why, IMO, oil indexation is diminishing in favour of gas-on-gas pricing). That being said, the key interplay will still be Europe / Asia, as I think there is still less correlation between the US and the other two (Europe being the swing purchaser / importer). How that interplay pans out will largely determine global LNG price formation. As a general remark, I would say that the perception of LNG as a clean and non-costly fuel will globalise the market even more. What I mean is that even though I am based in Europe, I absolutely need to know how supply & demand is shaping in Asia, my US buyer needs to be cognisant of my own demands, and so on. 15 years ago, that wasn't the case.

nattyphizz:

Any thoughts on Asian demand? storage?

Ha, the 1 bln question. Storage capacity is important, at least for the next 2-3 months, not least because supplies are locked in (even if gas demand falls sharply). As for demand in general, I expect it will increase as lockdown relaxes (at least in China - Japan, I suspect, will be worse) although prices, particularly spot, will be dead cheap - for reference, have a look at the spot prices between China and India. It was something like $2/mmbtu. That's at least 70% lower than what it was 2-3 years ago.

Jul 11, 2020 - 2:14am
UnfinishedSentenc, what's your opinion? Comment below:

Have you traded in JKTC markets?

I am wondering how spot demand is in respect to major importers (China NOCs or end users in Japan) who have length either in term contracts which are still linked to oil, and/or have investments in large assets (I.e Sinopec with APLNG, PetroChina with Shell for CSG) and secured volume off take.

Putting COVID-19 aside, is it crazy for someone to build a physical book from ground up, especially given the current market dynamics with large portfolio players and cashed up trading shops?

Jul 11, 2020 - 6:56pm
Jonnysdropgoal2003, what's your opinion? Comment below:

One word on Asia spot demand: resilience! As also touched on above, LNG demand has held tight during lockdown (all things considering) compared to oil, albeit at a hefty $ discount. China is a different story to Japan, not least because data is of questionable accuracy. I believe that China will continue supporting incremental LNG growth, I just don't know how fast they will go back to doing so.

I don't think it's crazy at all to build up a physical book from scratch. On supermajors, have a look at data to see the huge increase in LNG recently (and not just talking about Total and Shell (who have traditionally been the big boys). Then, on the commodities houses? Glencore's purchase of Orsted's LNG business, Mercuria's poach of the EDF trading team, Vitol's investment in LNG terminals (admittedly on regas not prop basis)...the list goes on. If the LNG industry was already saturated by 2020, I'd be very disappointed!

Jul 11, 2020 - 1:48pm
hsclown, what's your opinion? Comment below:

I'm interested in the physicals space, and was wondering where would you recommend a student start their career to become competitive for a seat at a commodities house? With BB banks reducing their physicals presence, would it better to start at a supermajor or is BB S&T still the most common?

Jul 11, 2020 - 2:45pm
CommodsinEurope, what's your opinion? Comment below:

Majors are the best place to start, however when recruiting you gotta cast a wide net (and I mean very wide - throw apps to marketing arms of producers and snaller trade shops or funds). Bank vs major is just not comparable...different businesses frankly- one is mainly phys the other is fin although both will be involved in both phys and fin to various extents. Majors are great because you're handheld throughout the learning process in the program (in some cases to the point where I've heard theres too much handholding, has upsides and downsides) and the opportunities are massive given they ARE the energy business to an extent and by definition. Great thing about BB is you actually get paid well at the junior level (major comp is still good but nowhere near BB), and you learn to learn (entreprenarial) which is hard but has its upsides and you also learn to trade without the infra behind you (extremely valuable if going for a buyside gig). I know many other young guys in the biz (i am a jr) who started at the top trade houses (glen, traf, vitol) and got the hell out within 1-2 years with little to show in terms of exp ...it's not the best place to learn but its not terrible at all, think it might be heavily team dependent...

If I had to pick I would do major TDP, trade house program and last BB

Jul 11, 2020 - 7:05pm
Jonnysdropgoal2003, what's your opinion? Comment below:

I would agree with the above poster. The graduate programmes at Majors are by far the best option, especially the BP one (although Shell is the undisputed king of supermajors for LNG). They offer you the best training because they are actually designed to make you a trader.

Different story with commodities houses where the majority of traders are laterals (myself included). Even the ones who offer graduate schemes are not that dedicated to home-grow traders. Rather, they are designed to attract good talent with the view to possibly find a good place for them within the organisation later one, if they prove their worth.

If you are dead-set on physical trading then BB S&T is probably not the optimum starting point (unless you don't have more relevant options of course - generally speaking starting your working life at a top institution such as a BB has plenty of advantages!). It's a completely different story from when I started with a BB before/on the credit crunch. Commodities desks have now either diminished completely or been reduced to financial trading.

  • Prospect in IB - CB
Jul 30, 2020 - 11:44am

Awesome stuff sb. What would the typical path and exit opps be coming from BB financial trading?

Jul 11, 2020 - 2:35pm
ddDddDddDd, what's your opinion? Comment below:

hey thanks for doing this, a little out of the line but I'm in oil products (EBOB RBOB Heating oil etc..) anw I'm not a trader but I'm an aspiring undergraduate analyst . been doing a lot of reading and still can't get my head around some stuff... since there are lots of similarities between us products, just wanna know understanding, what does a freight netback mean and buying FOB and selling CIF, how do you guys actually determine those values?

Jul 11, 2020 - 6:42pm
Jonnysdropgoal2003, what's your opinion? Comment below:

Simplistically, netback is the LNG revenue minus opex. Opex meaning, at its most basic, costs for converting the gas into LNG + transportation costs. Where it gets more complicated is when you add more to the subtraction, e.g. hedging costs (from any swaps/options/futures/etc.), royalties etc.

Platts now publishes global LNG weekly netback forecasts but companies will still use different ways for measuring netbacks so it's a bit risky to do a $-for-$ comparison unless you know the values are comparable. I recommend you check the annual reports / SEC filings of some of the producers, as netback calculation is always set out by management.

Does this answer your question?

Jul 12, 2020 - 2:44am
Addax, what's your opinion? Comment below:

THANKS for your highlighting answers MR. LNG and god bless

QUESTION: Do you Did you any deals with Goldman or SOUKI at all ?

View: HH Natural Gas Barrel of oil equivalent at $10 BSS USGC + $15-16 CAPEX versus OIL $40-50 is no brainer for any importing country India, Japan, SE ASIA. Buy those assets when nobody wants them, means... pretty much now.

  • 1
  • Prospect in S&T - Comm
Jul 11, 2020 - 10:38pm

What are your thoughts on the trade finance (discounting receivables, monetizing inventory, optimizing working capital etc.) part of the commodity trading business? Currently getting some internship experience in this area, and I was wondering if it would be transferrable to a front office role. Also, what are your thoughts in starting in an operations role as opposed to trade finance? Thanks so much foor doing this!

Jul 12, 2020 - 3:32am
Jonnysdropgoal2003, what's your opinion? Comment below:

Between the two, ops lends itself a bit more naturally to FO transition. That being said, trade finance experience can be excellent and you can get a useful skillset. I would look at shops with a banking legacy in their DNA (Mercuria, Castleton, Freepoint, etc.) as their investment strategy can involve financing structures more integrally.

Jul 19, 2020 - 12:15pm
new_guru, what's your opinion? Comment below:

Jonny - thanks for this thread. I've wondered - how deep is the shipping market for LNG tankers. I see day rates listed in LNG daily, but how wide is the 2-way? How many players treat their tanker fleet as a "sunk" cost vs a tradeable commodity?

Who are the major brokers in phys LNG?

Thanks again!

Jul 20, 2020 - 3:31am
Jonnysdropgoal2003, what's your opinion? Comment below:

LNG shipping is very poor atm. The longer trades were on hold and there was just not enough of short/spot cargo shipments to bring the freight $ up. Medium/long-term it should get better as large scale projects resume / go back on track.

Re brokers, Tullett Prebon and Poten & Partners.

Jul 21, 2020 - 2:05pm
CountofMonteCristo, what's your opinion? Comment below:

Where do you think the edge is in LNG trading. Are you building supply/demand models to forecast price for JKM, or is it still mostly a relationship business? Would physical players also trade paper, and how transparent is the data for the market as a whole.

Jul 22, 2020 - 5:28pm
Jonnysdropgoal2003, what's your opinion? Comment below:

Although a strong technical skill-set on fundamentals is essential, it is still very much a relationship business. Modelling will only get you so far, not least because, as I think you are alluding, market data is unreliable. The main reason for that is because industry growth will largely be defined by China in the near/medium future, and data coming out of China is limited and unverified.

Jul 23, 2020 - 11:52am
pactumx, what's your opinion? Comment below:

Thanks for doing this as LNG is not so widely known (given the somewhat big boy LT dynamics.

Could you explain the general trading strategy for LNG? Do you trade around a certain demand or certain supply? If you could choose what would be your preferred vantage point?

Secondly, do you think the "ultimate" portfolio player endgame is still the objective of most Players in the industry? How big has your book needs to be in order to extract value from it?

Jul 27, 2020 - 5:37am
Jonnysdropgoal2003, what's your opinion? Comment below:

Preferred vantage point is diversification. Putting aside the Majors, for players such as mine and the other commodities houses, the mostprofitable ones have easily been the ones with the most diverse portfolio of LNG trading assets. Take Gunvor for instance who are now the largest independent trader. Their short-term/spot desk is very active (taking into advantage of the arbitrage opportunities), their prop asset-managing investments are killing it and they are also concluding some large-scale/long-term trades. They have every base covered.

So in response also to your second question, yes I think the ultimate portfolio player is still the endgame and all commodities trading houses have strategically been moving to that direction. But it needs more $$ than oil for sure...

Jul 27, 2020 - 7:47am
pactumx, what's your opinion? Comment below:

I see. Prop Assets, you mean upstream stakes or regas facilities? On the arbitrage, is it more geographically, eg Asia vs US/Europe or coal to gas switching? I do not see any product spreads or time spreads like in oil. But do correct me if I am wrong.

Secondly what sales terms do you typically trade in LNG? I am more familiar with terms like eg: FOB, BL+30 against LC. Curious to know also how credit risk/payment is dealt with in the LNG sphere. Were you impacted by the Force Majeure from CNOOC / India?

Aug 12, 2020 - 2:18am
fw236, what's your opinion? Comment below:

I know trader at Gunvor and I have talked to other members of the team. It surprises me that they do not have analyst at all. It's super-lean. I have been wanting to get a spot at that place for eons.

Jul 24, 2020 - 5:41pm
DeltaDecay, what's your opinion? Comment below:

Would be interested in know about your views on ExxonMobil's entry into the trading space. Do you think their entry has had an impact in the LNG space and in the European oil markets in general?

Also you said that you worked for a BB early on in your career. Just a wild guess but by any chance was it Morgan Stanley?

Jul 25, 2020 - 4:27pm
twoplustwo85, what's your opinion? Comment below:

Obv the prompt is in the toilet, but where do you see medium term prices (outright and vs. relevant anchors) in the next 2-3 years? Does this impact your phys decision making?

Jul 27, 2020 - 5:54am
Jonnysdropgoal2003, what's your opinion? Comment below:

short/medium term is shite and will remain so. A bit longer-term, I think prices will be resilient enough, not least because the majority of deals are still locked into long-term contracts.

As to whether it impacts on my decision-making, it does, and I am quite bullish on long-term prospects.

Aug 6, 2020 - 3:15pm
twoplustwo85, what's your opinion? Comment below:

Thanks for the reply. I'm broadly bullish the curve: too much premium has been eroded given the soft near term fundamentals of the last couple of years. Good luck!

Jul 27, 2020 - 9:45am
George_Banker, what's your opinion? Comment below:

Can you walk through the LNG trade cycle and nomination timing and process? For example if you are trading cargos for October delivery, what are the dates that matter and what pricing indicators are you looking for - how far in advance is something hedged and what are the timing risks for physical delivery? What happens when you put something back onto a longer term agreement...for example if you put something back to Cheniere marketing (I assume you deal with them)?

Also, do you hate when people say "livin the dream"?

  • 2
Jul 27, 2020 - 11:13am
Jonnysdropgoal2003, what's your opinion? Comment below:
George_Banker:
Can you walk through the LNG trade cycle and nomination timing and process? For example if you are trading cargos for October delivery, what are the dates that matter and what pricing indicators are you looking for - how far in advance is something hedged and what are the timing risks for physical delivery?

It depends on your output (spot vs short vs long). Spot/short term pricing forecasting is more of a guestimate. A six month price difference can be as high as 10%+.

George_Banker:
What happens when you put something back onto a longer term agreement...for example if you put something back to Cheniere marketing (I assume you deal with them)?

Longer-term agreements are different, as you are dealing with more macro factors such as the strength of the counterparty, tightness of your contract, pricing is a bit more elaborate, what credit support I am getting, etc. I am not just relying on futures forecast because then I would never get paid!

George_Banker:
Also, do you hate when people say "livin the dream"?

Well I am British so during shit days we will just talk about the weather and how crap it is.

Jul 27, 2020 - 11:09am
pactumx, what's your opinion? Comment below:

Do you encounter destination clauses in your trading? How do you deal with them? I read once that Spain is typically used for reloads to get around them. Is there a similar place in Asia?

Jul 27, 2020 - 11:13am
pactumx, what's your opinion? Comment below:

On hedging where it more exotic for me, what is the instrument (swap/option/future) most typically used? Could you name or specify the counterparties in the LNG hedge market? Is the banks, majors? Who is considered a clear leader?

Jul 27, 2020 - 11:22am
Jonnysdropgoal2003, what's your opinion? Comment below:
pactumx:
On hedging where it more exotic for me, what is the instrument (swap/option/future) most typically used?

All of them, e.g. if it's a pure hedge to a physical trade then futures are quite common.

pactumx:
Could you name or specify the counterparties in the LNG hedge market? Is the banks, majors? Who is considered a clear leader?

Majors will have prop trading desks, as will commodities traders, but that's not the priority. The priority is very much physical. Banks more so I guess and some of the hedge funds. I am in physical so I don't trade financial on a prop basis.

Jul 29, 2020 - 8:51am
passthegas, what's your opinion? Comment below:

Totally appreciate you doing this! I'm currently working as a trading analyst on the phys gas desk at a major utility. LNG research is definitely a part of my work and I want to get more active in it as I progress.

I was going to ask for your thoughts on how to transition from utility phys gas to trade house (like yours) in LNG? Thanks man!

Jul 29, 2020 - 10:17am
Jonnysdropgoal2003, what's your opinion? Comment below:

Totally doable. At least in Europe, major utility houses such as RWE and EDF have graduate programmes hiring applicants out of uni or (often) with some interim experience required). Even if your current employer doesn't have such a scheme, I would have thought that you would be eligible to apply to one that does - prior experience as a junior a trading analyst is quite common and relevant.

Jul 30, 2020 - 6:59pm
passthegas, what's your opinion? Comment below:

Sweet - thanks for the good words! Any comments on graduate school for a career in trading? Maybe something like an MS in Energy Management or something?

  • Prospect in IB - CB
Jul 29, 2020 - 10:23am

Sounds sick dude, Im interested in commodity trading at a hedge fund and am curious what the process is like going from BB Trading to a hedge fund, research or trader role, and how to best position

  • Prospect in IB-M&A
Jul 29, 2020 - 10:56am

I am a trading intern at bp/Shell in Houston but tbh I know very little about commodities trading and the paths. If you could go back in time, what would your ideal path in commodities trading be (if you would do it at all? Thank you!

Jul 29, 2020 - 2:16pm
Jonnysdropgoal2003, what's your opinion? Comment below:

I wouldn't do anything different in terms of my own career start. My first exposure at my old BB wasn't in commodities, it was in prop trading (remember this was pre 2008) - think FX, equities, etc. and I really disliked it which is why a few months in I jumped ship to the commodities division after a position opened up. It was all a rite of passage and good learning ground at the time (plus the opportunity to trade at a young age).

That being said, things are VERY different now and BBs aren't the obvious choice for someone who's committed to a commodities career. As mentioned in one of my earlier answers, the supermajor graduate trading schemes are top notch (BP especially) so it sounds you are on the right track. Try and convert your internship to a full-time offer after uni, complete tha graduate programme and hopefully that will lead to a trading position. You're absolutely laying good foundations.

Aug 4, 2020 - 3:15am
fw236, what's your opinion? Comment below:

There is this company called 6-1 commodities with hedge fund backing. They recently poached the whole Gazprom team. Google them. They are running speculative trades, which to me is just pure punting.

Jul 29, 2020 - 8:22pm
CanadianDude, what's your opinion? Comment below:

Thanks for doing this. I'd be interested in hearing your thoughts on hydrogen as an alternative fuel - do you think it has potential to meaningfully displace gas/LNG? I'm aware that it's nowhere near competitive on cost alone, but there's a massive push towards renewable energy & growing climate awareness that seems very bullish for electrolysis & carbon capture + storage.

Array

  • 2
Jul 30, 2020 - 7:01am
Jonnysdropgoal2003, what's your opinion? Comment below:

I can't see it for three reasons:

  • cost

  • availability (all very well having a swanky new vehicle using renewable energy but what happens with 90% of the transpotation modes out there - look at the maritime industry for instance: hydrogen is only feasible for some types of ships like ferries, containerships, etc.)

  • technology (we are just not there yet with hydrogen, both in terms of efficiency and in terms of H&S).

To be clear, I am not discarding its importance and it will definitely have a role to play both within the renewable energy sector and actually in terms of the reneweable energy sector itself. Even if they can't be symbiotic, I do think that the two industries will at least co-exist for the next generation.

Jul 30, 2020 - 8:17pm
CanadianDude, what's your opinion? Comment below:

Great points - thank you!

Array

Aug 2, 2020 - 1:00am
fw236, what's your opinion? Comment below:

Hey there. I am currently working as a LNG junior trader/business development role for the biggest Chinese city gas distributor in China. It all sounds good except...our 10 LNG tanks are under construction and would not be up till 2023, and although we have 2 other tanks that are commissioned ad the end of the year, terminal usage is still a tug of war with PetroChina. So the deals I'm working on are mainly back-to-back, where we come in the middle of an established deal(through relationship) and provide abit of credit extensions to our downstream. Good thing is that we are starting our long term and I could probably learn on that.

My question is that a bulk of my day to day job seems to be revolving around negotiating the Master Sales and Purchase agreement, which I'm not really interested in. As much as I agree that the clauses are important and this is preparatory work, do you think in the long run I am able to learn much from it and take it to another shop? Also, even if the tanks were up, a bulk of the operation seems to be procurement for China. What can I learn from that other than relationship building.

I do do analysis on JKM, TTF and NBP but I don't see how they matter in my day job. Also, we bid for tenders sometimes for the trading houses and sleeve.

Would greatly appreciate your input!

Aug 3, 2020 - 6:36am
Jonnysdropgoal2003, what's your opinion? Comment below:

A few points:

  • you're in China, which is (together with India) the biggest growth market for LNG in the years to come, so milk it.

  • it sounds like you're at ENN and you guys have some really exciting projects coming up. LNG trading is a longer-term game than other commodities (not least because of the scales) which means that there'll be times of prep work and strategy. Make full use of it.

  • If your plan is to move to a commodities house, then make sure (i) you continue building on your technical skillset (learning on each index, doing the long-term negotiations) and (i) you network like crazy to have a foundation for having relationships in the region. You can then leverage of those to jump ship (albeit it'll have to be in Singapore).

Aug 3, 2020 - 11:46pm
fw236, what's your opinion? Comment below:

Hi man,

Thanks for your reply. No I'm not in ENN (even though I have work extensively with them before). I'm currently in a stated owned company, based in Singapore though.

Due to this COVID situation everyone has stopped hiring. I was interviewing with Aramco Trading for a junior trading role and that has been put on hold as well. They have the trading mandate, but lack trading resources( Port Arthur got called off).

Even though I'm only doing back-to-back trading, I'm currently learning deal economics- e.g How to calculate netback arb, how to negotiate ballast bonus etc. My company is also doing long-term tender so I thought that would be useful as well. Other than that, do you think my main jobscope as of now, i.e negotiating MSPA and business development in general will be useful for my goal as a trader?

I understand that BP Trader Development Program is also on hold. And with Shell losing so much money, the situation is not helping. While I should be glad that I sort of have a solid job, I want to make the most out of it. Guess I will just have to wait till our 10 tanks are up and running.

Aug 3, 2020 - 6:09pm
EnergyHOU, what's your opinion? Comment below:

Agree with Jonny on above.

I'll add that as a deal originator (producer marketing arm side) in LNG, do NOT underestimate your contracts knowledge. Your bosses are throwing you through the MSPA and SPA hoops because they know its value long-term re your career. It's boring, it's dry, but it's fundamental. Good traders and originators are good because they know how to negotiate deals both on the paper and in person. Next up for you will be understanding commercial structuring and options which will feed into your contracts knowledge.

Also agree sounds like ENN, STAY THERE, bullish you guys. I'll respond to your PM later this week.

Aug 3, 2020 - 11:50pm
fw236, what's your opinion? Comment below:

Thanks EnergyHOU. I'm not in ENN, we are bigger than them as they are privately owned but we are state owned. With that, also comes limited mandate and risk averse capacity. I will definitely stay for the time being trying to learn as much as possible. Also agree on your comment on MSPA, even though it's incredibly boring and dry. Haha.

But just out of curiosity. What do the analysts do at trading house on a day-to-day basis? I interact with some of them(similar age), they seem to be given a very small role of just editing CNs and reconciling positions. I actually feel that I'm in a better spot than some of them(even though I get paid a ton less haha).

Aug 4, 2020 - 1:27pm
Jonnysdropgoal2003, what's your opinion? Comment below:
EnergyHOU:
Good traders and originators are good because they know how to negotiate deals both on the paper and in person.

To the OP: I fully agree with this post from EnergyHOU. But I just wanted to highlight the quoted bit above in particular as it completely hits the nail on the head.

Aug 4, 2020 - 6:54am
fw236, what's your opinion? Comment below:

Btw can any seasoned trader enlighten me on how reload works?

An excerpt from Platts August 3:

"London-Market participants reported that some initial interest in reloads out of Northwest European terminals had been seen on the back of a widening prompt spread between European delivered prices and JKM. Sources said that while the number of parties seeking reloads was limited, enquiries were primarily being targeted at H2 August and H2 September loadings. "They are going for the contango. You can.."

Taking it at face value, I would think that one leases the tank and stores LNG inside, waiting to take advantage of a higher price at a later period or at another location. Please explain. thanks.

Aug 4, 2020 - 1:49pm
Jonnysdropgoal2003, what's your opinion? Comment below:

Sort of. Yo can do an inventory transfer (i.e. load LNG from tranks of another shipper) or, more commonly (and what the above is referring to), you reload previously unloaded LNG cargo out of Europe (which some terminals here can/claim they can do) and you export it to Asia, which is a higher-priced market.

Operationally, it's inefficient but, as a buyer, I sometimes do it because 1) I don't have to share diversion upside with my supplier (which is standard for divertible supply contracts - the majority of the supply into European terminals is divertible, with a few exceptions such as Spain) and 2) I don't get charged a premium when I buy from a producer, who will invariably want wants to control LNG flow.

The availability / commercial viability of a reload comes and goes depending on how the market is going, on availability of shipping, on what parallel supplies (=US) are incoming, etc.

Aug 5, 2020 - 5:27am
Jonnysdropgoal2003, what's your opinion? Comment below:

The specs are an issue due to the boil-off of methane and nitrogen if you're putting into a network, not if you're using for a fuel source (because the cargo's bulk temp is warmer than usual for loading out of an export terminal). But regardless, it is easy to resolve because most import terminals for networks have a Wobbe correction facility, meaning they balance the calorific richness by mixing in nitrogen and the only cost is the fuel used to run the nitrogen producer, which is very easy to price. The chartering guys may end up having an argy bargy with the shipowners about boil-off rate, etc., but this is rarely an issue under the LNG sale & purchase.

Aug 5, 2020 - 11:11am
fw236, what's your opinion? Comment below:

That's super helpful dude. And just want to reach out for some career advice. I want to trade paper at some point in my life, maybe going to banks as the pay is better. Do you think my physical experience is going to be relevant? Assuming I'm staying for the long-term tender or do you think my experience will be more relevant for a major. Thanks.

Aug 5, 2020 - 12:51pm
Jonnysdropgoal2003, what's your opinion? Comment below:

You can trade paper at a major or a commodities house, though this will by and large be for hedging purposes. In those circumstances, your physical experience will be helpful for sure, and you can even try and make the move internally. Your current shop may afford you that opportunity but you can also look at trading houses which have a bit of a financial DNA in them (such as Mercuria, Castleton, Freepoint and others that are spin-offs from BBs).

If your goal is to trade paper on a pure marketing making basis, then I would assume you're better off going to a hedge fund or a prop trading firm, and in those circumstances your current experience will be less relevant.

Finally, if you decide to stick with physical long term, then I would say keep an open mind about the type of shop, as you never know which place will give you the opportunity to trade your own PnL. Trading at Vitol or Trafi doesn't in and of itself mean you will make more money or have a better career advancement than being at a utility or a major.

Aug 6, 2020 - 2:14pm
Koo21, what's your opinion? Comment below:

What made you get into commodities? You mentioned you started out at a different desk?

Do you see yourself sticking it out for the long term?

Aug 7, 2020 - 4:46am
Jonnysdropgoal2003, what's your opinion? Comment below:

I didn't like my first desk (as mentioned above, think prop trading fixed income/equities). I just felt like I was staring at a screen all day manipulating money with no real impact. The commodities opening felt more "real world" to me so I thought I should give it a shot. I am not saying I was right or wrong, it was just a matter of taste (most things in life are, including top end career choices) and financial engineering isn't for me.

As for the future, who knows. I am happy where I am and I really enjoy my industry so I would like to stay in it long-term (and keep rising through the ranks at my current shop). I am of sufficient seniority at my desk that I can regulate my travelling (pre-COVID) and my hours better which is important for me as I have a young family so if I were to leave for something else it would have to be on the same/better terms.

Aug 7, 2020 - 12:29pm
fw236, what's your opinion? Comment below:

Damn dude, why would you think moving money around is meaningless...To me that's abit more fun than moving cargoes around..haha

Nov 19, 2020 - 1:46pm
IloveLNG2502, what's your opinion? Comment below:

HI, I think this has might have been asked before but I would like to know whether the best way to join as an LNG trader is through recruiters or by applying on companies' websites? Noticed that those types of roles don't get advertised...

Dec 8, 2020 - 6:19pm
Jonnysdropgoal2003, what's your opinion? Comment below:

Depends. If you want to move to a front-office (=trading) role straight away in a shop like mine (commodities house), then you will need to have started elsewhere and get poached. Otherwise 1) there may be openings with majors / utilities and you can apply directly or 2) join a commodities house in a non-trading role (as advertised by the company).

Dec 9, 2020 - 4:35am
BrianHunter, what's your opinion? Comment below:

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Dec 9, 2020 - 5:24pm
Jonnysdropgoal2003, what's your opinion? Comment below:

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Dec 11, 2020 - 4:40am
BrianHunter, what's your opinion? Comment below:

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