Managing Price Risk In Commodity Trading For Steel
This white paper sets out the basic principles of using hedging instruments to mitigate exposure for commodity price movements. We have created some simple examples using the LME Steel Billet Futures contract to illustrate:
These are just theoretical examples we have created, although the price data is real and correct as at 1st August 2011. This paper uses steel billet as the commodity traded and hedged in this case using the LME Steel Billet Futures contract. However the principle applies to almost any commodity for example iron ore, coal, precious or base metals, and the hedging instrument may be either exchange traded such as from the LME or CME, or an Over the Counter (OTC) instrument such as a Swap. Many companies are now issuing such OTC instruments, priced from various sources such as indices or average prices from differing market data sources. Please contact Aspect Enterprise Solutions to discuss in more detail how this applies to your business and how this approach can provide a stable and predictable business cash flow and revenue /P&L forecast. |
Please fill out this short form to receive your copy. Fields Marked with an asterisk (*) are required. Please use only latin letters and numbers.
We just got in 8 weeks what has eluded us for 8 Years!
