INTRODUCTION
As being one of the expert agents in Vietnam metal market, Oristar has
achieved remarkable success even though they are just five years in this industry.
This is not too strange for us to imagine how it really is but it still makes us curious
about what they are doing and how every thing is running in every day working in
the company. Why a newcomer in a very sensitive market like metal market can be
survived and gain a lot of success which might take decades for many existing
companies to do that. In this report, we will have the answers for all the above
questions.
Because metal market is a special market which is operated in different
regulations to consuming market’s and influenced by many sensitive factors, so
before going to analyzing Oristar’s business performance, we had better give an
over view on metal market. That might help viewers to follow easily. Analysis on
Oristar’s business activities should remark its achievements and also remains that
will be discussed in the last chapter of recommendations. Hence, there will be three
major chapters in this report:
Chapter I: Literature review and overview of metal market
Chapter II: Oristar’s recent performance and its business activity on Aluminium
Billet (Al Billet)
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Chapter III: Recommendations to improve Oristar’s business results on Al Billet
and the company as a whole.
The report may be limited in scope of study in a way that just focuses on one
major branch of Oristar’s business activities that is Aluminium Billet. Therefore,
there are still many problems needed to be discussed in further researches.
Chapter I: Literature review and Metal
market overview
1.1. Background of import and export activity
1.1.1. Definition of international trade and import-export activity
International trade is the exchange of goods and services across

In the past, payment by cash was the most popular in every deal but today
when international trade are stepping at much higher levels and cash payment has
loss its position in international trade. Instead, there are a plenty of different terms
of payment used in settling balance between buyers and sellers in international sale
contracts. Letter of credit (LC)
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has been the most popular terms of payment in the
world trade today. It is because LC is the safest way for both buyer and seller of
receiving cargo and getting back money. Besides, other terms such as documentary
collection, open account and advanced payment have also been key tools of
international settlement. In brief, payment services provided by banks are playing a
vital role in fulfilling the major duty of payment in any sale contract.
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A letter of credit is a document issued mostly by a financial institution which usually provides an
irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others
e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against
complying documents as stated in the Letter of Credit.
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Transportation is also an essential part of international trade. It is the
movement of goods from one place to another. However, it is just happened to
physical sale contracts, which state that goods must be transferred from one country
to another. It is not a long time ago when international transactions could not reach
between the dealers at far distances. However, a long with the development of world
trade, transportation services has had breakthrough jumps. Today, nearly all
human’s innovation in transport has been applied to cargo transportation among
countries and it seems that there is no where in the world that could not be reached
by transporter. That is really a big support to boosting international trade.
In summary, basic definitions of international trade especially im-export
activity and other supporting services have been covered briefly. Hopefully the

In return, the more international trade develops, the greater opportunities it will
create to oversea agent activity. Hence, we might come to a conclusion that
international trade and oversea agent activity have a reciprocal relationship. In
following chapters, we will work on the real situation of Oristar and see the relation
between them more specific.
1.2. Overview of metal market
1.2.1. World metal market
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Before going in company analysis, we should have an overview on metal
market in general to get the basic knowledge on how the market is organized and
operated. In addition, market characteristics and trends are also among focuses.

Metal market has its own rules which are very different from others. One of
the reasons is that metals are special goods, which follows only market supply and
demand. There are many factors affecting to metal price. The fluctuation in price of
one metal will have widespread influence on the materials, semi-products, and
finished products used the metal as well. The movement in metal price is presented
on metal exchanges such as LME (London Metal Exchanges), Comex (Commodity
Exchange).
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These markets are the guide line for all suppliers to make their own
price because price of metals, which are inputs for their production, are reflected on
such metal exchange markets. Hence, if there is a small change in price of one metal
in LME, for example, it will lead to a succession of changes in price of all materials
and products made from the metal.

Because metal market is very highly organized and operated on market supply
and demand through 24-hour transactions, it has been attracting more and more
buyers and sellers to make deals in the market. The more deals the metal exchanges
carry out, the more exact it reflects on the price of metals regarding to market

the price of material will be months and years ahead. This helps the physical
industry to plan forward in a world subject to often severe and rapid price
movements. Such is the liquidity at the Exchange that the prices ‘discovered’ at the
LME are recognized and relied upon by industry throughout the world. The prices
keep moving all the times reflecting supply and demand of materials by industries.
In 2006 LME achieved volumes of 87 million lots, equivalent to $8,100 billion
annually and between $35-45 billion on an average business day. Despite its
location in London, the LME is a global market with an international membership
and with more than 95% of its business coming from overseas
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.
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Quotation period: period that the seller allows the buyer to book price for the sale contract they has
signed.
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http://www.lme.co.uk/
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Being a 24-hour market, transactions on the LME are taken place through an
inter-office telephone market and LME Select, an electronic trading platform. Each
day the LME announces a set of official prices, which are determined from the
open-outcry trading. This trading is highly liquid and trade and industry has
confidence that they properly reflect the current supply/demand situation. These
prices are used by industry worldwide as the basis for contracts for the movement of
physical material throughout the production cycle. Normally, suppliers set their
price based on LME current price + Premium. Premium includes all costs such as
production cost, transportation cost, extra costs and profit. The Premium is the only
one that makes different among suppliers and their competitiveness in price.
However, quality of material is one of the significant factors to compete in such
sensitive market. Materials which are listed on LME must be satisfied standards
created by LME or equivalent international standards such as JIS (Japanese

aluminium manufacturers are stuck in a marsh of price wars, so the domestic price
trend goes in a contrast way with the world trend. The roof of the problem might
come from the individual behavior of manufacturers which distorted the real supply
and demand on the market and led to the unbalances in price between Vietnamese
aluminium billet market and the world market. Hence, it appears an urgent demand
of establishing an organization which is responsible for directing and orienting the
market and preventing such continual price wars as it is being this time in Vietnam.
Besides, another reason is that in Vietnam there are hardly any giant in
aluminium industry who may have a big influence on the whole market or control
the market. It is a fact that almost all big aluminium manufacturers in Vietnam have
had similar performance and equal impact to the market. That’s why the
competition in the market has become so tough.
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http://www.metalprices.com/
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Some big aluminium manufacturers in Vietnam are Do Thanh, Dong Anh,
Song Hong, Scancom, Quang Binh, Nam Hai, and Dien Bien. There are 60 % of
these companies which have ever made deals with Oristar
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on aluminium billet.
However, from time to time the business relationships have some changes.
Oristar has to face with the competition coming from some trading companies
at this moment such as Tran Phu electric Company, Van Xuan Co., Ltd and Tuong
Thanh trading Company. Despite the fact that Oristar still has some competitive
advantages over its rivals, there are internal problems that they should improve. In
next chapters we will discuss in more detail.
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Oristar: which will be discussed in following chapters
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Chapter II. Oristar’s overall performance and its

Vietnam, Aluminium Billet is the most strategic one with highest annual revenue.
In the next part, we will focus more on Aluminium Billet in analyzing Oristar’s
business activities.
2.1.3. Oristar’s market share and position in the market
Through five years running business, Oristar has created a good prestige in
Vietnamese metal market especially for Aluminium Billet and Copper Cathodes.
Today, there are about 30 % of extruding companies in Vietnam which have
imported aluminium billets through Oristar. For other materials such as copper
cathodes, primary aluminium alloy ingot and secondary aluminium ingot, Oristar
has also built rather stable networks among oversea suppliers and domestic
companies, which gives it a position in the market.

Oristar’s role in the process is like a broker, who connects the buyers and the
sellers together. However, Oristar has bigger liability to both suppliers and
customers. Particularly, it has to follow up each sale contract and if there is any
failure, Oristar has to co-ordinate in solving problem with both sides. Sometimes,
Oristar ought to compensate for trivial claims from buyers for maintaining good
business relationships with its suppliers. One of the most significant responsibilities
of Oristar as being agent is selling materials as much as possible to local customers.
Each year Oristar has to meet target revenues set by its suppliers, which is a good
way for the suppliers to evaluate performance of their agent and also adjust
commission rate to the agent accordingly. The strength of Oristar here is that it
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knows very well about Vietnamese market, where is rather strange to foreign
suppliers to approach. For local customers, they can make advantage of Oristar’s
expertise knowledge of metal market, which will support much for their decisions
making about where, when and from whom they should import. In short, Oristar
plays a very importance role in connecting foreign suppliers and domestic customers
and keeping the international transactions between them flow smoothly and easily.
In general, company profile has given the key information about Oristar, its