Knowhow arbitrage represents the benefits that can be achieved by applying advanced processing methods and knowledge in different production regions, adapted to their local characteristics and conditions.

For instance, we introduce efficient manufacturing ways to increase hourly throughput at our partner producers site, resulting in lower purchasing costs, shorter procurement lead times and maximal customer value.  

Processing arbitrage seeks to benefit from the different pricing for particular processing steps between markets and regions. We use our trading and market knowledge, supplier network with all forms of value-added processing capabilities to optimally fulfill our customers need.

We can earn margin by sourcing raw material and perform processing at separate locations due to cost variations from region to region, while adding value to our customers and meeting bespoken specifications.

Time arbitrage seeks to benefit from the shape of the forward curve for physical delivery. In contango markets, when investors are paying a premium for forward delivery, we do a cash-and-carry arbitrage. For instance, we would buy steel now, store it, then sell it back on the forward date.

We hedge our price risk and lock in premium by selling steel futures today and buying them back on the forward date. In backwardated markets (when forward delivery is cheaper than immediate delivery) the reverse cash-and-carry arbitrage is available.

Geographic arbitrage identifies temporary and short-term price differences between different locations worldwide. We employ our supplier network and storage facilities to take advantage of changing supply and demand conditions.

For example, demand for commodities typically rises before the Chinese New Year. Traders can buy commodities during the summer and autumn months in other places, store and then transport it to China to take advantage of this seasonal variation.