Blog & Analysis
Articles and commentary on commodity price risk, hedging strategy, and market structure.
Managing Lithium Price Volatility: A Risk Management Framework Using Cash Flow at Risk (CFaR)
How OEMs can convert lithium market volatility into concrete budget projections using notional CFaR, with a 60-day hedging trigger and a worked example of bringing a $10 million lithium hydroxide exposure back within risk tolerance.
Read on FastmarketsWhy Commodity Price Risk Management Matters to Debt Investors
How hedging commodity exposure stabilizes cash flows, strengthens creditworthiness, and tightens yield spreads — and why lenders and bondholders push producers to manage price risk.
Read on FastmarketsMitigating Risks Without Financial Instruments
When no derivative market exists, self-insurance premiums sized to the value of a cap or floor let procurement managers and producers build an internal buffer against adverse price moves.
Read on FastmarketsNavigating Raw Material Risks: Challenges and Opportunities in the Automotive Industry
Three steps for automakers to build a risk management process around volatile steel, aluminum, lithium, cobalt, and nickel input costs — from risk measurement through hedge execution.
Read on FastmarketsWhy Your Physical Procurement Contracts Might Be Worth More Than You Think
Caps, floors, and escalators embedded in index-linked physical contracts are options with real monetary value — and they can be monetized by selling them to a counterparty.
Read on FastmarketsHow Lithium and Cobalt Option Contracts Can Help Producers and Consumers With Hedging Strategies
A walkthrough of the CME's cash-settled, average-priced (Asian) options on lithium hydroxide and cobalt, with payoff profiles for puts, calls, and costless collars.
Read on FastmarketsCommodity Risk Management: Do the Benefits of Hedging Battery Raw Materials Justify the Costs?
A framework for weighing opportunity costs, direct costs, and VaR against the value of margin certainty — illustrated with a cathode maker caught by the 2021–22 lithium and cobalt surge.
Read on FastmarketsCommodity Trading: A Guide to Hedging, Futures Contracts and Zero-Cost Collars
The fundamentals of hedging with futures and options, and how a zero-cost collar lets producers and consumers lock in a price range without paying premium.
Read on Fastmarkets