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
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.
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.
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.
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.
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
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.
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.
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.
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
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.
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.
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 full Exclusive Reports.
On one hand, the UK faces recessionary pressures, with its economy contracting 0.3% in Q4 2023, worse than expected. On the other hand, despite this, the annual inflation rate remains steady at 4% in January 2024. High and persistent inflation complicates rate-cutting efforts to stimulate the economy. The GBP is ready for a sharp move. The question is, are you hedged appropriately? Are you poised to benefit from likely movements? What’s your risk management strategy?
The February 2024 Zinc Outlook Report suggests a complex market ahead. It predicts a near-term dip in China’s zinc output due to increased costs and environmental concerns, potentially supporting prices. Conversely, China’s stimulus measures hint at a demand recovery, influencing market surplus projections. Moreover, disruptions in global smelting operations could exert upward pressure on prices, despite a temporary bearish outlook due to the Chinese New Year and economic slowdown.
The “USDINR Outlook and Strategy” report of February 2024 dissects the intricate interplay between rate expectations and currency performance. It offers a deep dive into the hedging strategies essential for navigating the currency markets. The analysis details the impact of US monetary policy on the Indian Rupee and outlines potential paths for USDINR, considering various global and domestic economic scenarios.
The February 2024 Chinese Yuan Outlook indicates a poised economy with a 4.9% growth in Q3 2023, defying forecasts amidst a property slump. The People’s Bank of China holds the loan prime rate at 3.45%, fostering economic stability. However, the property crisis and trade headwinds persist, with expectations of a continued cautious monetary policy.
The “USDBRL Outlook and Hedge Strategy” report outlines the Brazilian economic scenario, highlighting the Central Bank’s rate cuts in response to slowing inflation and the economy’s modest growth. Despite challenges like fiscal concerns and high interest costs, there are positive signs such as a tight labor market and real wage gains. The report forecasts a short-term USDBRL movement towards 5-5.2, with a medium to long-term uptick expected. It advises importers and exporters on hedging strategies to navigate market volatility effectively.
The “Lead Outlook Report” for February 2024 forecasts a temporary dip in Chinese lead production due to smelter maintenance, impacting global supply. Concurrently, demand is expected to rise, driven by increased battery production in Europe, China, and the US, alongside overall global demand growth. However, the report suggests a balanced market due to a slower rise in global supply, with lead prices anticipated to stabilize in the short term and potentially increase in the medium term, influenced by expanding lead-acid battery production and potential dollar weakening.
We can work with your team to enhance their skills
Training and Capacity Building
Here’s what we will cover during the session-
- Commodity Outlook: Global factors and Price Risk ManagementÂ
- Hedging Instruments: Overview of instruments across various exchanges and banks.Â
- Strategy & Process: Insight into hedging strategies and processes.Â
- Correlation and Basis Risk Management.Â
- Regulations & Case Studies: Guidelines, documentation, and real-world cases.Â
Here’s what we will cover during the session-
- Commodity Outlook: Global factors and Price Risk ManagementÂ
- Hedging Instruments: Overview of instruments across various exchanges and banks.Â
- Strategy & Process: Insight into hedging strategies and processes.Â
- Correlation and Basis Risk Management.Â
- Regulations & Case Studies: Guidelines, documentation, and real-world cases.Â
Here’s what we will cover during the session-
- Commodity Outlook: Global factors and Price Risk Management.
- Hedging Instruments: Overview of instruments across various exchanges and banks.Â
- Strategy & Process: Insight into hedging strategies and processes.Â
- Correlation and Basis Risk Management.Â
- Regulations & Case Studies: Guidelines, documentation, and real-world cases.Â
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Here’s what we will cover during the session-
- Commodity Outlook: Global factors and Price Risk Management.
- Hedging Instruments: Overview of instruments across various exchanges and banks.Â
- Strategy & Process: Insight into hedging strategies and processes.Â
- Correlation and Basis Risk Management.Â
- Regulations & Case Studies: Guidelines, documentation, and real-world cases.Â
