For a commodity like PVC resin, the Incoterm does most of the work in deciding what your landed cost is and where the risk sits. Getting it wrong is expensive, so it is worth being precise about.

The terms that come up

FOB (Free On Board) — your obligation ends when the resin passes the ship's rail at the loading port. You arrange the main carriage, the insurance and everything on arrival. This is the most common basis for export sales of PVC resin from China, and it is the one most buyers are used to quoting against.

CFR (Cost and Freight) — we arrange and pay the main carriage to the destination port; you arrange insurance. The risk still transfers at the loading port, but the freight cost is ours to quote and yours to pay.

CIF (Cost, Insurance and Freight) — as CFR, and we also arrange the insurance. Note that the minimum cover under a CIF sale is usually only 110% of the contract value, which is often less than the cover a buyer actually wants for a full container of resin.

EXW (Ex Works) — the minimum obligation on the seller. You take over at the factory gate and arrange everything, including export clearance. Usually only sensible for a buyer with its own freight forwarder and its own clearance arrangements.

DDP (Delivered Duty Paid) — we deliver to your door with everything paid, including duty and clearance. The most expensive in terms of price and the one where our own cost of getting it wrong is highest, so it needs a real address and a real clearance arrangement.

How payment is normally structured

The common arrangements for resin exports are:

  • T/T with a deposit and the balance before shipment — commonly 30% deposit, 70% against the bill of lading copy. This is the most common structure.
  • T/T 100% before shipment — occasionally used for smaller or first orders, or where the buyer is paying from an established relationship.
  • L/C at sight — a letter of credit. Irrevocable, confirmed L/Cs are routine. The cost of the L/C itself, and the documentary requirements, are worth understanding before you issue one.
  • L/C 30 days — deferred payment, sometimes a negotiated term of the arrangement rather than the norm.

Whichever is agreed is stated on the quotation together with the milestone — when the deposit is due, when documents are issued, and the deadline for presentation.

What the quotation states

Every quotation from us specifies: the grade and grade level, the quantity, the packaging, the price, the price basis, the Incoterm, the named place, the payment terms and the validity period. Anything not on the quotation is not agreed, and a quotation is valid for the period stated on it.

Two practical points

The named place matters. FOB Qingdao and FOB Shanghai are different prices. If you quote FOB without the port, you will get a quotation for the nearest convenient port, which may not be the one you want.

Insurance on a CIF term is usually thin. 110% of the contract value is the standard minimum, and on a cargo where a single container is worth six figures, that is worth reviewing before you accept it. Ask for the coverage basis in writing.

Send us the destination port and the terms you normally work on, and we will quote against them.