Risk Management along the metals supply chain

January 25, 2017

Łukasz Bielak, Head of Market and Credit Risk, KGHM Polska Miedź S.A shares his insights. Click here to download his presentation on this topic from ComRisk 2016!

 

Lukasz will be speaking at ComRisk 2017, Wednesday Day 2 – 17th May 2017 on Trade finance and the global financial environment for commodity trading.

 

 

  • Copper and USDPLN are the two of the most important risk factors

  • Negative correlation helps to reduce the overall market risk level

    • C1 cost curve (USD/lb) is very important for copper mining companies benchmarking. FX rates contribute significantly to changes in specific companies cost positions.

  • Be alert: correlation ratios have been fluctuating through the time

  • Probability distributions prove that big price movements are possible

    • Monte Carlo simulations for commodities are based on mean-reversion processes

    • Probability distributions are relatively wide and some of presented price levels seem to be extreme …

    •  … but almost all of these levels have been seen during recent 8 years.

  • What happens when natural hedging opportunities have already been exploited?

    • If probability distributions of future prices or financial results are to wide to accept, derivatives can be used to shape the portfolio.

  • Cyclicality and negative correlation between assets create an opportunity to improve hedging efficiency.

     

Click here to access Lukasz’s complete presentation!

 

 

Łukasz Bielak, will be speaking at ComRisk 2017.

 

Day 2, 17th May 2017 on Trade finance and the global financial environment for commodity trading.

 

 

 

 

Click here to download the full agenda!

 

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