“How much does a VLCC cost per day?”
Seeing Lee Jong-woo's discouraged look, Park Jin-hyuk became interested instead.
"This is uncertain. Prices can fluctuate at any time depending on supply and demand... Currently, demand has decreased significantly, and the daily rental rate for VLCCs is around $40,000."
"$40,000? When it's expensive, how much can it be?"
Park Jin Hyuk continued to ask.
"My secretary knows the details better, so let him tell you."
"Okay, I'll ask them to come in."
Park Jin Hyuk pressed the intercom button to let Kim Jun Woo and Lee Jong Moo's secretary in.
After the secretaries came in and sat down, Park Jin Hyuk began by saying:
"From now on, everything we discuss must be kept confidential. President Li, do you agree?"
Li Zhongwu was happy to hear Park Jin Hyuk call him the chairman, and he answered happily:
"agree."
As he said this, he put his cane aside.
Park Jin Hyuk said to his secretary:
"I was just talking to Chairman Li about VLCCs. The current daily charter price is about $40,000, right?"
The secretary did not answer immediately, but looked at Li Zhongwu.
Li Zhongwu nodded at him.
"Tell Chairman Park everything you know."
Through this inconspicuous action, Park Jin Hyuk realized that Lee Jong Woo had a good relationship with his secretary.
The secretary then said:
"It's not for transportation but for storage purposes. If you sign a one-year lease, the rent is indeed around $40,000, and it's continuing to fall, and it may fall below $40,000."
"So, even if I only use it for one day, I still have to pay a year's rent?"
"Yes, if the lease is for six months, the rent will increase to $50,000 per day."
“How much crude oil can a VLCC carry?”
"It's around 2 million barrels on average."
"Two million barrels, one-year lease, $40,000 a day."
Park Jin Hyuk muttered to himself, while Kim Jun Woo quickly wrote down all of this.
Lee Jong-moo observed Park Jin-hyuk and Kim Jun-woo from the side.
Then he looked at his personal secretary again.
This secretary was trained by him over many years, but he knew that Park Jin Hyuk and Kim Jun Woo would not work together for more than three years. However, the level of tacit understanding between Park Jin Hyuk and Kim Jun Woo was no less than that of his own secretary. Kim Jun Woo knew very well what his boss was thinking and what he needed.
He sighed:
"Your secretary seems very capable and smart."
Park Jin Hyuk said with a smile:
"Our relationship is purely professional."
"How do you understand the phrase 'purely a work relationship'? Does it mean there's no personal connection between you two?"
"Often, bosses and secretaries develop a bond after working together for a long time. However, if you use that bond to guide your subordinates, it can often lead to a lot of problems."
In order to relax, Park Jin Hyuk chatted with the old man.
"That's an interesting thing to say."
"Director Jin and I don't have that kind of relationship."
"Then how do you cooperate?"
"Money...right?"
Park Jin Hyuk looked at Kim Jun Woo, and Kim Jun Woo smiled.
"In companies and the workplace, relationships maintained with money are often more pure. Subordinates are expected to produce a certain amount of output based on the amount of money they're paid. However, more bosses these days are stagnating salaries while constantly increasing the workload they require. How can subordinates be motivated like this? If you want someone to work more for you, you should pay them more. What do you think?"
Park Jin Hyuk seemed to be saying that as long as the other party could bring benefits to himself, he would also consider the other party's interests.
The old man smiled.
He was curious about where these strange ideas came from for this grandson who was only thirty years old.
"Let's get back to the point. So, after loading the purchased crude oil onto the VLCC, all we have to do is wait for oil prices to rise, right?"
Lee Jong-woo's secretary shook his head at Park Jin-hyuk.
"It's not that simple. While buying spot at a low point, you also need to sell forward futures to ensure the security of your investment through the forward premium confirmed now."
"That means these are two actions."
"That's right."
"Arbitrage through the price difference between forward futures and spot?"
"That's right."
It would be more accurate to say that Park Jin Hyuk was confirming something rather than asking the other person.
"Two million barrels is not a small number. The current price of crude oil..."
"It's trading at $35 a barrel right now."
"If we have 2 million barrels, that's $70 million, or 85 billion won in Korean won. To hedge the risk, we also need to sell an equal amount of forward futures. Does that mean we need to invest 170 billion won for one shipload of crude oil?"
Park Jin Hyuk looked at Kim Jun Woo, hoping to get his confirmation.
Jin Junyu nodded at him.
“What is the expected benefit?”
"Let's use $35 per barrel for spot prices and September for forward futures."
Park Jin Hyuk nodded.
The secretary looked at the documents he had brought and replied:
"The current price of September forward futures is $42, and the difference with spot is $7. For 2 million barrels, the profit is $14 million."
"Does that mean I need to hold the spot goods for six months?"
“Yes, this is the expected return for half a year.”
"For half a year, the daily ship rental is $50,000. Excluding the $9 million in ship rental from the $14 million, the net profit is $5 million.
"Correct, $5 million is the maximum possible gain."
This is equivalent to an investment of 170 billion yuan (about 900 million RMB) and a net profit of 6 billion yuan (about 31.75 million RMB).
Although the risk is not high, the return on this investment is too low for Park Jin Hyuk.
"President Li, I wonder how much you plan to invest?"
Park Jin Hyuk knew that Dongjing Industry did not have much idle funds.
"I'm going to... take a risk."
"adventure?"
"Well, if your view is that oil prices have bottomed out, then I'm going to take a big gamble and not sell forward futures, so I'll skip this step."
"You mean, just buy spot? Isn't that too risky?"
"Didn't I tell you to take a risk, as long as you think the oil price won't fall any further?"
Having said that, Li Zhongwu lowered his head.
"Dongjing's situation is dire right now. If things continue like this, I'm afraid it won't last even ten years. So I'm taking a chance. Even if it goes bankrupt, it'll be at my hands. If I win, there might still be hope for the company to survive. But now it seems like even that chance is gone... I thought it was your idea for DS Energy to stockpile crude oil."
After hearing what his grandfather said, Park Jin Hyuk unconsciously reached for the cigarette on the coffee table.
But then he stopped, after all, there were elders present.
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