This guide aims to shine a light on an important area of commodity trade finance: prepayment transactions.
Prepayments are a vital component of global trade. Their complexity however has grown in recent years, as have their centrality to the economies of many commodity producing countries. In recent years, Trafigura has become one of the leading companies engaged in Structured Trade Finance, with total prepayments for commodities rising from USD700 million in 2013 to more than USD5 billion in 2019. By publishing this paper, it is our intention to enhance understanding and invite stakeholders to engage on how transparency in this area can develop in the future.
The ‘Prepayments Demystified’ guide complements the ‘Commodities Demystified’ publication first published by Trafigura in 2016. The ‘Commodities Demystified’ series was created to explain the modus operandi of commodity trading firms and the way in which they help organise supply chains that underpin today’s globalised world.