In order to truly understand concentrate pricing structures you need to have an understanding of hedging principles. Terms like contango and backwardation are part of the language. Regardless of whether you have a “no hedging” policy or not in your business, to maximise your revenue you must first understand how the forward markets work. Only in this way can you properly value a commercial proposal for buying or selling.
Every sale or purchase contract you have contains Quotational Periods, or pricing dates (QP’s) for each payable metal. Many contracts provide QP options, with the option usually declarable by the buyer. Understanding the value that is captured or lost with the chosen QP is necessary to negotiating the most favourable commercial return for your business.
The LME run some great courses several times a year. If you are a business with a sole marketing and logistics employee, then we recommend you send them to one of these sessions;
If you have several people on your team then it will be better economy for Conrad Partners to provide you with in-house training.
Regardless of your situation, we are able to advise on appropriate hedging techniques to meet your needs. For those businesses who choose not to hedge, we can audit your current contractual pricing arrangements, and make recommendations on how they can be optimised going forward. The goal here is to ensure you are extracting maximum value from your pricing structure.