Commodity Hedging

Commodity Risk Management

The surge in commodity prices can significantly impact business profitability, as was the case from 2000 to 2021. Many corporates experienced challenges during the period due to such surges. We at QuantArt can help you manage your Commodity risks through advisory and automation. Whether you have exposure in base metals, coal, petroleum, or agricultural products, safeguarding your exposure from risks is crucial. For organizations relying on commodities as raw materials, adequate protection is essential to prevent potential margin erosion due to price fluctuations. At QuantArt, we specialize in collaborating with you to develop tailored hedging strategies. Our commitment includes close monitoring of your exposures, providing guidance on contract management, advising on optimal hedging timings and instrument selection, and ensuring competitive pricing. Rest assured, our guarantee is that you will not only save costs but also boost your profitability.

We put our clients first. We measure our successes based on how well each of our clients has achieved their Treasury Goals.

Commodity Risk Management Services

Commodity Hedge Set Up

To hedge commodity risk, the set for hedging is needed. We do end-to-end set up of commodity risk management and hedging desk. Once the set-up is done, you can hedge your risks inappropriate exchange or in the OTC market.

Commodity Hedge Timing

We evaluate in detail the price movements which impacts your company and the price movements in the market traded instrument. We evaluate basis risk, correlation risk and appropriately advise how to hedge.
Basis risk evaluation is one of the most important criteria for the evaluation of commodity risk hedging. We have the deep Quant ability for that analysis.

Commodity Risk Management Policy

We help you prepare a commodity risk management policy. Commodity RMP is a comprehensive document that covers the exposure, objective, hedge rules, allowed instruments, limits, process, MIS formats, and documentation process. The policy is also an RBI requirement if you want to hedge. The policy to be customized for every company with specific requirements.

Commodity Hedge Strategy

We will make a hedging strategy for you that is geared to protect your risk and meet the objective. Strategy broadly covers the time of hedge, the quantum of the hedge, an instrument of hedge, and cost of the hedge.

Training and Capability Building

We do conduct commodity hedging and risk management training for our clients and executives. It involves explanation of how hedging helps, how pricing is done, option structures and many more details on commodity hedging.

Commodity Risk Management Services

Option Based Commodity Hedging

Options help you to mitigate risk while allowing you to benefit from the favorable moves. Often in commodity risk management, options are extremely useful. We provide a calculator, structures, pricing, strategy, and monitoring of option-based hedging. Option structures are also used to reduce the cost of options.

Daily Customized Review and Recommendation

We review your exposures and hedges every day and evaluate alternative strategies which would be useful. We select the right strategy and recommend the same in a timely manner. During market hours our team will come back to you promptly whenever there is a market movement.

Execution Support

We support in hedge execution as well. We help you strategize for getting the right price and for the smooth execution of hedges. We use calculators, our understanding of bid-offer, and other nuances of the market to extract the right price for you.

Monitoring and Performance Management

We monitor your overall exposure, past deals, settlement details, etc to ensure that policy adheres, and strategy is aligned for achieving the objective. We remain focused on objectives like achieving cost reduction, profitability enhancement, or volatility elimination.

How we help our Commodity Clients

How we help our Commodity Clients

What is our vision for our clients?

Our aim is to offer a stable and cost-efficient environment for our clients, enabling them to concentrate on their core business areas. We are committed to overseeing all facets of risk management and hedging on behalf of our clients.

With what objective was QuantArt started?

Our intent was to instill transparency in operations, establish quantitative accountability in result assessments, implement strategic excellence based on proprietary algorithms, and exhibit proactive responses to market movements. The ultimate goal was to ensure client profitability regardless of the direction of market fluctuations.

How have we been successful in continuously bringing value for our clients?

We have an outstanding track record of attaining measurable results aligned with the specific objectives we set in collaboration with our clients. This achievement is made possible by our meticulous selection of highly skilled experts in Treasury/FX risk management. What sets us apart is our distinctive approach—our advisory services are directly provided by senior advisors and directors without any delegation. Each client’s portfolio receives dedicated attention from one of the three members of our leadership team. They conduct thorough reviews every morning and evening, strategizing on the optimal course of action. QuantArt aligns closely with each client’s vision, establishing quantifiable and measurable objectives for a mutually successful partnership.

Exclusive Reports

We release well researched reports on Global markets-Outlook and Strategies, Global currencies, Commodities, Risk management and Hedging strategies, Hedging instruments and Best practices. Log on to QuantArt Hedgenius to access our Exclusive Reports.

As we step into 2024, the Eurozone is grappling with a series of economic setbacks. The third quarter of 2023 saw a startling halt in growth, with the region’s economy performing worse than expected, and Germany’s GDP declining by 0.4%. The manufacturing sector is struggling, highlighted by a Purchasing Managers’ Index of just 47.1, indicating contraction for the sixth consecutive month. Business lending has seen its first drop in eight years, falling by 0.3%, while the real estate sector is facing a daunting €176 billion refinancing gap by 2027.

India’s steel sector shines with a robust 11.4% year-on-year growth, outpacing a global slowdown as November sees a dip. The nation’s surging construction, fueled by infrastructure investments, forecasts a sturdy 7.7% steel demand hike in 2024. Keep an eye on this dynamic market as it defies trends and powers ahead.

In our January 2024 report, we take a closer look at the British Pound (GBP) as the UK faces a tough economic period with a 0.1% GDP contraction, a significant trade deficit of £4.480 billion, and high inflation rates. Despite efforts by the Bank of England to keep inflation under control, it remains high at 3.9% year over year, down from 4.6% but still nearly double the Bank’s 2% target. Unemployment is relatively stable at 4.2%, but manufacturing activity is slowing down, with the PMI falling to 46.4. This report covers short term and medium term outlook on GBP and provides practical hedge strategies for dealing with GBP in these uncertain times?.

As we step into 2024, the Eurozone is grappling with a series of economic setbacks. The third quarter of 2023 saw a startling halt in growth, with the region’s economy performing worse than expected, and Germany’s GDP declining by 0.4%. The manufacturing sector is struggling, highlighted by a Purchasing Managers’ Index of just 47.1, indicating contraction for the sixth consecutive month. Business lending has seen its first drop in eight years, falling by 0.3%, while the real estate sector is facing a daunting €176 billion refinancing gap by 2027.

Discover the latest strategies for Indian IT/ITES exporters in 2024. With the USD-INR rate at 83.25 and a forward rate of 84.65, learn how options like Seagull and Range Forwards offer better flexibility and protection against currency depreciation. This presentation unveils how these options outperform traditional forward contracts, ensuring better financial outcomes in uncertain economic times.

Unlock the secrets to smart borrowing in 2024 with our analysis of global interest rates. Discover why USD, GBP, AED, and INR have higher rates, while EUR, CHF, and JPY are more affordable. Learn how to navigate the tricky landscape of interest rate swaps and currency risk management to optimize your borrowing costs. Our guide provides crucial insights into managing loans in a high-interest rate environment while adhering to local regulations, making it an essential tool for savvy financial planning.

We can work with your team to enhance their skills

Training and Capacity Building

Commodity Hedging for Base Metals

Here’s what we will cover during the session-

  1. Commodity Outlook: Global factors and Price Risk Management 
  2. Hedging Instruments: Overview of instruments across various exchanges and banks. 
  3. Strategy & Process: Insight into hedging strategies and processes. 
  4. Correlation and Basis Risk Management. 
  5. Regulations & Case Studies: Guidelines, documentation, and real-world cases. 
Commodity Hedging for Petrochemicals

Here’s what we will cover during the session-

  1. Commodity Outlook: Global factors and Price Risk Management 
  2. Hedging Instruments: Overview of instruments across various exchanges and banks. 
  3. Strategy & Process: Insight into hedging strategies and processes. 
  4. Correlation and Basis Risk Management. 
  5. Regulations & Case Studies: Guidelines, documentation, and real-world cases. 
Commodity Hedging for Agri-Products

Here’s what we will cover during the session-

  1. Commodity Outlook: Global factors and Price Risk Management.
  2. Hedging Instruments: Overview of instruments across various exchanges and banks. 
  3. Strategy & Process: Insight into hedging strategies and processes. 
  4. Correlation and Basis Risk Management. 
  5. Regulations & Case Studies: Guidelines, documentation, and real-world cases. 

 

Commodity Hedging for Coking Coal

Here’s what we will cover during the session-

  1. Commodity Outlook: Global factors and Price Risk Management.
  2. Hedging Instruments: Overview of instruments across various exchanges and banks. 
  3. Strategy & Process: Insight into hedging strategies and processes. 
  4. Correlation and Basis Risk Management. 
  5. Regulations & Case Studies: Guidelines, documentation, and real-world cases. 

We can work with your team to enhance their skills

Solutions

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