What is an FCO (full corporate offer)?
FCO · Full Corporate Offer
A seller’s complete offer to sell a stated cargo on stated terms, valid for a stated period. Unlike a soft offer it is meant to be firm within its validity, and it is the document a buyer can reasonably act on.
Key points
- Firm within its validity — a short window is normal and correct.
- Should price against a named index with a stated differential.
- A steep discount to the exchange is the clearest sign the cargo does not exist.
At a glance
| Issued by | The seller |
|---|---|
| Binding | Intended as firm within the validity period |
| Typical validity | Days, not weeks — the market moves |
| Must contain | Specification, quantity, Incoterm, port, price basis, payment terms, inspection, validity |
| Red flag | A large flat discount to the published index |
A firm offer with a clock on it
A full corporate offer is issued by the seller and sets out everything the buyer needs to decide: commodity and specification, quantity and shipment schedule, delivery basis and port, price or pricing formula, payment terms, inspection regime, and the date the offer expires.
The validity period is the part that distinguishes it. An offer good for seven days is a commitment to hold those terms open for seven days, and a seller that reprices within its own validity has told the buyer something useful about itself. Commodity prices move, which is why validities are short — often days rather than weeks.
What makes an FCO credible
Specificity. A credible offer names the origin, the producer or refinery where that is not confidential, the loading port, and a shipment window that corresponds to a real production schedule. It prices against a published index — LME, LBMA, Platts, Argus — with a stated differential, rather than quoting a flat number detached from the market.
It also states what happens when the cargo is not exactly as described: the tolerance on quantity, the rejection thresholds on quality, the price adjustment for grade variation, and who appoints the inspector. An offer silent on all of that has not been written by someone who expects to ship.
The discount that is not there
Offers circulate quoting metal or ore at a steep discount to the exchange, sometimes twenty or thirty per cent below LME, in quantities no single producer runs. These are not offers. A producer able to sell at the index has no reason to accept less, and the discount exists to make the document attractive enough to keep circulating.
The check is arithmetic rather than instinct: take the published price for the grade, subtract realistic treatment and refining charges and freight to the stated basis, and see whether the number offered leaves anyone a margin. If it does not, the cargo is not there.
Frequently asked questions
- Is a full corporate offer binding on the seller?
- It is written as a firm offer for its validity period, and a seller that honours its offers treats it that way. Whether it is enforceable depends on the wording and the governing law; most FCOs are expressed as subject to contract, so the binding document remains the SPA.
- What is the difference between an FCO and an SCO?
- A soft corporate offer is indicative — it describes what the seller expects to be able to do, subject to confirmation. A full corporate offer is complete and firm for a stated period. The soft offer opens the conversation; the full offer is the one a buyer can act on.
- How long should an FCO be valid?
- Usually a few days. Physical prices move with the exchange, so a seller holding terms open for a month is either pricing in a large buffer or not pricing against the market at all. A very long validity is worth asking about.
Related terms
A seller’s indicative offer, describing what it expects to be able to supply and on roughly what terms, subject to confirmation. It is a starting point for negotiation rather than something a buyer can accept.
A non-binding note from a buyer setting out what it wants to buy and on what terms. It commits nobody to anything, and its real function is to open a conversation in enough detail that the seller can tell whether the enquiry is serious.
A buyer’s purchase order, issued on company letterhead and described as irrevocable. Despite the name it binds nobody until a seller accepts it, and in physical commodity trading it functions as a more formal-looking letter of intent.
The contract itself — the first document in the sequence that actually binds the parties. Everything exchanged beforehand is superseded by it, and any term not carried into it has no effect.
Trading this, or trying to price it?
CommoFlow sources, buys, sells and ships physical commodities from the Middle East, Central Asia, the Caucasus, Africa and Australia. If a contract term is deciding your economics, our desk deals with it daily.
Contact our desk