In today's volatile commodity markets, unpredictable price swings in steel (like Hot-Rolled Coil or HRC), aluminum, copper, and other key inputs can disrupt budgets, squeeze margins, and strain customer relationships. As a mid-sized US manufacturer with annual revenues from $50M to $500M, you can't afford to let global factors like emerging economies turn forecasting and budgeting into a gamble. That's where Mastering Commodity Hedging comes in—a comprehensive guide from Flambeau Consulting that equips owners, CEOs, and CFOs with the risk management tools to achieve price certainty, cut earnings volatility, and secure loan financing.
 
This 21-page framework draws from proven industry practices, focusing on financial derivatives settled through banks like JP Morgan, Goldman Sachs, and Morgan Stanley. Learn how bank-based hedges offer cash settlement at competitive rates, avoiding physical delivery unlike supplier contracts or exchange-traded futures on the CME or NYMEX. Preserve your supplier ties while meeting customer demands for fixed-price contracts, all while shifting price risk to banks and maintaining focus on price, not delivered quantity.
 
Inside, you'll find:
 
Understanding Volatility: Analyze 20-30 year price histories from sources like LME, CRU Index, Midwest Premium, kitcometals.com, and FRED to model the impact of 10-20% swings on your profits—volatility acts like a hidden tax, but hedges minimize it.
 
Methods to Hedge and Types of Bank Hedges: Explore financial instruments, including fixed-price swaps, and compare pros like competitive rates against downsides such as upfront premiums (1-5% of contract value), complexity, opportunity costs, and counterparty risk.
 
Risks and Best Practices: Navigate basis risk and more with expert guidance on monitoring, compliance, and regulations that mitigate bank stability concerns.
 
Steps to Take Before the First Trade: Actionable takeaways to define objectives (e.g., cover 30% of exposure), review commodity exposures, calculate savings from stable costs, and build bank relationships.
 
Hedge Strategy and Execution Examples: Real-world templates like hedge policies, recap emails, and trade confirmations to execute seamlessly.
 
Case Studies: See how a Midwest fabricator avoided $300,000 in losses from a 20% steel price rise, or a steel swap on 6 million pounds locked in margins—mirroring our client successes, including over $20 million in savings, reducing material costs from 84% to 71% of sales, and boosting on-time shipments from 8% to 75%.
 
Glossary and Conclusion: Key terms (e.g., backwardation, call options) and final insights on fostering operational resilience and financial stability.
 
Don't let fluctuations hit your bottom line. Purchase Mastering Commodity Hedging today and take control of price risk for reliable budgeting and smoother financial statements.
 
Price: $49.99 | Format: PDF | Pages: 2