Comprehensive risk management should also consider risks from the price movement of commodities. Futures, options and option strategies, and interest rate strategies linked to a metals index are ideal tools for hedging or optimizing purposes.
All of these instruments can be provided in euros and US dollars with periods of up to two years, and in some cases for five years. As no physical delivery takes place, a cash settlement is made upon maturity. You can also profit from fluctuations in the commodities sector.
Metal price risk strategies
- Transfer of risk: Securing the flow of commodities and the inventory as a means of smoothing the company’s results and improving planning reliability
- Optimization: Strategies to compensate for rapid price movement; moderation of the effects of the current price situation
- Investment in commodities: Investment strategies to supplement and diversify an existing investment portfolio
You can currently trade in the precious metals gold, silver, platinum and palladium and the base metals aluminium, copper, zinc, lead, nickel and tin. Alloy exposure can be hedged with a corresponding weighting of the base metals. The minimum trading amount for base metals is one lot (e.g. 25 tons copper, 6 tons nickel). Hedging options for crude oil from Brent and Gasoil are currently being prepared.
- Smoothing of fluctuations in the operating results
- Avoidance of unwanted impact on the P&L through the systematic application of control tools
- Use of forward discounts for a potential decrease in the cost of commodities
- Simple hedging options using cash settlement
- High volatility and the expectation of further increases in commodity prices make it possible for investors to diversify their investment portfolios successfully