Calling all Physical Commodity TRADERS: Benchmark indices and physical commodity trading risk
I am Physical Petrochemicals Trading Analyst (Quant) in the MENA region. As you can imagine, I am quite behind real-world traders when it comes to the "actual trading", my experience lies in portfolio management which is pretty math-intensive.
My current aim is to be able to measure the risk/return for a specific trade deal between parties A and B (buy from A sell to B). I am able to get all risk and financial data I assumed relevant (pricing from IHS, costs from historical data at firm, credit risk, counterparty default risk, tax risk, NOC fees, Regulatory risk, etc) as well as a few indices I thought supercedes all transactions in the market (Market Risk Index, political risk, country operational risk, etc.)
My problem is finding literature on an actual MODEL. Or a case study, explaining how Glencore-Trafigura-Vitol actually takes this numbers and make a decision. How do these indices and other risk numbers tie into the analysis for a trade? What is known is easier, the prices are set, no forward curves or market shocks etc, is a geographical arbitrage opportunity and we are not taking a position. But how do these others risks get accounted for? And tips on where to look would be appreciated.