What is an ICPO in Commodity Trading? (Plus Simple Template)
You've found a petroleum supplier whose offer looks promising. You're ready to move forward. Then they ask: "Can you send us your ICPO?" If you're new to commodity trading, that request might send you scrambling to Google.
An ICPO – Irrevocable Corporate Purchase Order – sounds intimidating. The word "irrevocable" feels permanent and binding. But here's the reality: it's not a contract, it's not a payment, and you're not locked in unconditionally. It's simply your formal way of saying "I'm a serious buyer interested in purchasing your product under these specific conditions."
Understanding what an ICPO actually is, what it should contain, and what you're really committing to can save you from either overcommitting sensitive information or appearing unprofessional by refusing to provide one. Let's break down exactly what sellers expect and what protections you should maintain.
What is an ICPO?
ICPO stands for Irrevocable Corporate Purchase Order. It's a formal document expressing your intent to purchase a specific commodity under specific terms. Think of it as the commodity trading world's version of a letter of intent – it shows you're serious, but it's not the final contract.
What "Irrevocable" Really Means
The word "irrevocable" sounds absolute and binding. It's not. In the context of an ICPO, "irrevocable" means you're a serious buyer who won't randomly change your mind or waste the seller's time. It's the trading equivalent of putting your hand up and saying "Yes, I actually want to buy this – I'm not just window shopping."
But here's what an ICPO is NOT: It's not a legally binding contract (that comes later in the Sales Purchase Agreement). It's not a commitment to buy regardless of what terms the seller proposes. It's not payment or any financial obligation.
What it IS: A serious expression of intent that's subject to acceptable contract terms and contingent on product verification. You're saying you're ready to proceed through proper channels, verify the product exists, negotiate fair terms, and complete the transaction if everything checks out.
Think of it this way – sellers receive hundreds of inquiries monthly from people who have no real intention or ability to buy. An ICPO filters out the noise. It shows you understand the process and you're prepared to move forward professionally. But you're absolutely not locked in unconditionally.
Why Sellers Request ICPO
From the seller's perspective, requesting an ICPO is about filtering signal from noise. They deal with countless inquiries from tire-kickers, scammers, and people who are just "exploring options" with no real purchasing authority or budget. A proper ICPO immediately separates serious buyers from time-wasters.
The ICPO also confirms your exact requirements upfront – specific product specifications, quantities, delivery terms, and price expectations. This prevents the common scenario where a buyer spends weeks in back-and-forth only to reveal they actually wanted a different product or quantity entirely.
Additionally, an ICPO starts the formal procurement process. It moves the conversation from casual inquiry to structured transaction with documented terms and timeline. Professional buyers understand this process and can provide a proper ICPO. Those who can't usually aren't ready to complete a real transaction.
It's the seller's way of asking: "Are you for real, or am I wasting my time?"
What to Include in Your ICPO
A proper ICPO needs to give the seller enough information to understand exactly what you want to buy and under what conditions – but not so much sensitive information that you're exposing yourself to risk before the seller is verified. Here's what to include and what to hold back for now.
Essential Elements
Every ICPO should start with your company information: full legal company name, registration number, business address, contact person with title, phone, and email. This establishes you as a legitimate business entity, not a broker or individual without real purchasing authority.
Next, specify exactly what product you're buying. Include the product name (EN590 10PPM Diesel, Jet A1, etc.), detailed specifications or reference to international standards, quality requirements, and origin preference if any. Vague product descriptions lead to mismatched offers, so be precise.
Clearly state the quantity you need – the amount in metric tons, barrels, or liters, whether this is a trial shipment or ongoing contract, and monthly or yearly quantities if you're seeking a long-term supply agreement. Sellers price differently for one-time purchases versus ongoing contracts, so clarity here prevents confusion.
Define your delivery terms using proper Incoterms (FOB, CIF, etc.). Specify the port of loading if FOB, port of discharge if CIF, and your expected delivery timeline. These terms determine who pays for shipping, insurance, and risk transfer – critical details that affect your total cost.
Include your target price (or state "subject to negotiation" if you don't have specific numbers yet), preferred payment terms (letter of credit, wire transfer, etc.), and currency (usually USD for petroleum). You're not locked into these, but they give the seller parameters for their response.
Set a validity period for your ICPO – typically 30 to 60 days. This prevents sellers from trying to hold you to outdated terms months later if market conditions change.
Finally, add any inspection requirements, specific conditions, or special requirements that matter for your transaction. This might include things like "product must be inspected by SGS" or "delivery must occur within Q2 2025."
What You Can Provide Later
Some sellers request banking coordinates, passport copies, or company registration documents in the ICPO itself. These are optional and you can provide them later after you've verified the seller is legitimate. Don't expose sensitive banking information to someone you haven't vetted yet.
Simple ICPO Template
IRREVOCABLE CORPORATE PURCHASE ORDER (ICPO)
Date: [Date]
ICPO Number: [Your reference number]
Validity: [30/60 days from date]
BUYER INFORMATION:
Company Name: [Your Company Legal Name]
Registration No: [Your company registration]
Address: [Full business address]
Contact Person: [Name and Title]
Email: [Email]
Phone: [Phone number]
PRODUCT DETAILS:
Product: [e.g., EN590 10PPM Diesel Fuel]
Specifications: [List key specs or "As per international standard"]
Quantity: [e.g., 10,000 Metric Tons for trial, 50,000 MT monthly thereafter]
Origin: [Preference if any, or "Any"]
DELIVERY TERMS:
Incoterm: [FOB/CIF/Other]
Port of Loading: [If FOB, specify or "Seller's choice"]
Port of Discharge: [If CIF, specify your port]
Delivery: [Timeline, e.g., "Within 30 days of contract signing"]
PRICE AND PAYMENT:
Target Price: [Price per MT/barrel or "Subject to negotiation"]
Payment Terms: [e.g., "MT103 wire transfer within 48 hours of successful product verification at discharge port"]
Currency: USD
CONDITIONS:
- Product must meet stated specifications
- Buyer reserves right to inspect/dip test
- Final terms subject to mutually acceptable Sales Purchase Agreement
- This ICPO represents serious intent subject to satisfactory contract terms
Authorized Signature: ___________________
Name and Title: [Your name and title]
Company Seal: [If applicable]
What NOT to Include (Yet)
Here's what you should NOT include in your initial ICPO, despite what some sellers might request:
Don't provide full banking details until after you've verified the seller is legitimate. Banking coordinates can be used for phishing attempts or to make you a target for scams. Wait until you've seen proof of product and verified company credentials.
Don't include passport copies in your initial ICPO. Some sellers request this to make you seem more "committed," but it's not standard practice and exposes you to identity theft risk. Legitimate sellers don't need your passport to provide an initial offer.
Don't commit to unusual terms that heavily favor the seller. Keep your ICPO terms standard and industry-normal. If a seller insists your ICPO must include specific unusual terms before they'll respond, that's a red flag.
Don't commit to prepayment before product verification. Your ICPO should make clear that payment comes after successful inspection and verification. Any seller demanding payment commitments before showing proof of product is likely fraudulent.
Don't commit to providing an SBLC or LC before you've verified the product exists. These instruments are expensive and time-consuming to arrange. Verify the product first, negotiate terms, then discuss payment instruments.
Provide detailed banking and personal information only after you've verified the seller is legitimate, you've seen proof of product, and you're ready to proceed with a formal contract. Protection first, then commitment.
Red Flags When Providing ICPO
Be careful if a seller demands banking details in your ICPO before showing any proof of product. Legitimate sellers provide proof first, then request detailed financial information later in the process. This sequence protects both parties – you verify they have real product, they verify you have real funds.
Watch out for sellers who want your passport copy before providing basic company information about themselves. This is backward – they should be proving their legitimacy to you first, not the other way around. Passport copies are valuable for identity fraud and shouldn't be shared casually.
Be skeptical if a seller insists on specific unusual terms in your ICPO that heavily favor them. Your ICPO should state your requirements, not theirs. If they're dictating what must be in your ICPO before they'll respond, they're trying to lock you into unfavorable terms upfront.
Red flag if a seller requires your ICPO before answering basic questions about their company, showing proof of product, or providing verifiable credentials. The ICPO should come after initial verification, not before.
Finally, if you discover a seller is using your ICPO information for purposes beyond this specific transaction – like sharing it with other parties without permission or using it for marketing – that's a serious breach of trust and potentially illegal misuse of your corporate information.
Protect your information. Don't provide sensitive details to unverified sellers just because they demand it.
After You Send ICPO
Once you send your ICPO, here's what normally happens next. The seller reviews your ICPO within 1-2 days to ensure your requirements match what they can supply. If there's a match, they'll respond with either a Soft Corporate Offer (SCO) or Full Corporate Offer (FCO) outlining their terms, pricing, and conditions.
Both parties then negotiate terms – this might involve several rounds of back-and-forth on price, delivery timeline, payment terms, or specifications. Nothing is binding yet, so this is where you refine the deal structure.
Once you've agreed on terms in principle, the seller provides a draft Sales Purchase Agreement (SPA). This is the actual legal contract. You review it carefully, possibly with legal counsel, and negotiate any final adjustments.
When both parties are satisfied, you sign the SPA. This is the binding contract that commits both parties to the transaction. Only at this point are you legally obligated.
Then the transaction proceeds according to the SPA terms – product verification, payment, shipping, inspection, delivery, and final payment.
The ICPO is step 1 in this multi-step process, not a final commitment. There are multiple checkpoints and opportunities to walk away if terms aren't acceptable or verification fails.
ICPO vs. SPA: What's the Difference?
New buyers often confuse the ICPO with the actual contract. They're different documents serving different purposes in the procurement process.
An ICPO is the buyer's expression of intent. It's not a legally binding contract – it's your statement of what you want to buy and under what general conditions. It's subject to acceptable terms being negotiated, and you can withdraw it if the seller's terms prove unacceptable.
The SPA (Sales Purchase Agreement) is the legally binding contract. It's signed by both parties, contains all final negotiated terms, and commits both parties to complete the transaction according to those terms. This is where legal obligations begin.
The sequence works like this: You send your ICPO expressing your intent. The seller responds with their offer. Both parties negotiate terms. Once agreed, you draft and sign an SPA. Only after the SPA is signed does the actual transaction proceed with real financial obligations and legal commitments.
Think of the ICPO as "I want to buy this" and the SPA as "I will buy this under these exact terms."
Can You Withdraw ICPO?
Yes, absolutely. You can withdraw your ICPO if the seller's terms are unacceptable, the product can't be verified, the seller isn't legitimate, or your business conditions change significantly.
"Irrevocable" doesn't mean you must proceed no matter what happens. It means you're serious and won't withdraw arbitrarily or waste everyone's time. But you're not trapped if real issues emerge.
Professional withdrawal should be handled courteously with clear reasoning. Acceptable reasons include: "After reviewing your terms, they don't meet our requirements," "We're unable to verify the product exists as stated," or "Our business requirements have changed."
What's not professional: Withdrawing because you got a slightly better offer elsewhere after extensive negotiation, or pulling out repeatedly over minor issues. That damages your reputation and makes future sellers hesitant to work with you.
The key is legitimate withdrawal for legitimate reasons versus arbitrary or opportunistic withdrawal that wastes seller resources.
Bottom Line
An ICPO is your formal statement of buying intent, not a binding contract. That contract comes later in the form of an SPA after you've negotiated terms and verified the product.
Include essential information in your ICPO: company details, product specifications, quantity, delivery terms, price range, and payment preferences. These details let the seller provide an accurate offer.
Don't include detailed banking information, passport copies, or unusual commitments in your initial ICPO. Provide those only after you've verified the seller and you're ready to proceed with a formal contract.
Keep your ICPO professional but protective. Show you're a serious buyer who understands the process, but don't overcommit sensitive information or accept unfavorable terms just to appear cooperative.
After you send your ICPO, the seller provides their offer. You negotiate terms. Then you sign an actual contract (SPA). The ICPO is step 1 of this negotiation process, not a blank check.
Understanding this sequence gives you confidence to engage professionally while protecting your interests. You're not locked in by sending an ICPO – you're starting a structured conversation that leads to a fair, verifiable transaction.
Take Action
Skip the ICPO hassle for initial inquiry. Submit an RFQ on CommoditiesHub - simpler than ICPO for getting initial quotes from verified suppliers. You can provide formal ICPO later if needed.