The use of Digitized/Virtual marketing yards for trading

unstructured homogenous/heterogeneous Commodities.

The market has well established prices for commodities like gold and silver, but how do you
properly price commodities that don't trade very often? How does a company determine the price to
buy and the price to sell? The answer is commodity auctions. If you're trying to sell items that are
tough to price like rare earth elements, diamonds, metal scrap or minerals, an auction is the best way
to bring together buyers and sellers under an industry-best set of rules, construct the demand curve
properly through software driven means, and ensure that the commodities are traded at a true,
efficient market-driven price.

To move things forward, I will start with CI (cast iron) drums and rotors markets of a state in India.
After gathering data from this state (consisting of 4 cities), I will expand the market from regional to
national level consisting of 5 major ports of India and then global. In the end if my findings are upto
the mark and process of virtual marketing is optimized for utmost efficiency and cost savings, I plan
to expand the product range itself. For example, Energy- propane, butane, LNG, Agri- groundnuts,
sunflower seeds, cattle feed, various other heterogeneous recyclables- copper, aluminum, zinc,
nickel, etc. The product range is vast, but one constraint in selection of a commodity is how it’s
shipped, it should containerized cargo only. No bulk.

Figure 1 Illustration of the commodity taken into consideration

What is the novelty about this idea?

Truth to be told, there are n number of start-ups/ businesses around this digital trading game. But,
what I am proposing is kind of unique because we are going to introduce Dutch auctioning system.
Also, the major industry fear is the risk of defaults, or quality/ kind of materials exported to buyers.
As a matter of fact in this industry it is very tough to not get scammed. The buyer with small
appetite for containerized cargo has to pay upfront as the use of LCs is quite limited in the
scrap/recyclables industry. This involves tremendous risks as the seller might default on his
obligations or the quality of the material maybe crap. Similarly, genuine seller has its own risks,
credit risks is the major one of them. One way, to alleviate these risks is to trade the containers
which are in transit or ready to be loaded for futures trade.

This is what I am trying to make my thesis on. How to make containerized commodity markets
more transparent and accessible to small and midsized players, I want these players to be part of a
whole global picture. As I have worked for more than 5 years in this industry, I came across people
who want to trade 2-5 containers a month but as it is too small volume they are being restricted with
local markets. The local markets in India are quite sticky as the way these people work. There are no
contracts of the scrap metals in exchanges which makes its quite difficult to manage the risk. Price
discovery is quite difficult as well, as a trader, every morning I need to ask 10-15 market participants
(regional producers, consumers) about the spot prices. This is not efficient or transparent compared
to more liquid markets like primary gold, silver, etc.

The digitized platform provides B2B solutions to companies that buy, sell or broker recyclable
materials. We connect scrap professionals to facilitate trade in a $250 Billion market. We need to
include in-depth business and market intelligence, an online marketplace, and end-to-end trade
workflow management and finance tools.

The platform needs to be trusted by the stakeholders of the industry in order to facilitate trade flows
of recyclables. Business intelligence on trading partners and competitors, financial services,
documentation tools, and arbitration are just some of the elements we will combine to reduce
massive financial risks and market inefficiencies.
The key features of the Commodity Auction Automation system are the following: