7/25/2019 Interview for trafigura

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What are the main impacts across all business divisions of a physical trading house when prompt month crude contracts are trading $50 vs $100

What I assume you are implying is that prices of commodity have gone down drastically. This type of price decline is systematically induced due to either fundamental supply glut or complete industrial demand breakdown owing to financial distress in economy or a financial breakdown.

With such a reduction a CTH is bound to face numerous risks mainly, counterpartyrisk, credit risk, basis risk,to name a few. Also the day to day margin requirement in case the company has hedged a future oil requirement will severely impact the liquidity of the firm.

There could also be a possibility of self hedge if the company is into differentlevels of value chain, say logistics and storage

But a Large scale CTH has all the risks in control. So as such there isn't muchimpact since all the risks are hedged or controlled.

I grew up in New Delhi and Since in second year had a penchant for trading, so as soon as I got placed in Jaypee Commodities, I knew I had discovered my nirvana. I have always been fascinated by Trading and as such always have enjoyed my work. After moving to Futures First I also enrolled for executive MBA program withIIFT to gain valuable insights into International trade and Finance. I have als

o cleared Level I CFA but due to paucity of time and having become a family man,haven't been able to take it further seriously, though, I intent to complete itin next attempt.