December 5, 2022

Due to a government stimulus-driven economic recovery, China's steel sector output will grow next year, according to BHP. Moreover, they feel that "all fundamentals are in place" for China’s economy to grow over the next 20 years. The company is also bullish on metals demand related to global decarbonization efforts, stating “the world is going to require roughly four times as much nickel over the next 30 years as it did in the past three years, two times as much copper and steel.” These comments were made by BHP CEO Mike Henry at the Reuters NEXT conference held last week. (Source: Reuters)

Are you a bullish end-user of nickel, copper, steel, or other metals? AEGIS can help you create a bespoke hedging program by applying simple hedges involving swaps and call options. One such possible strategy is a costless collar. In this case, a “zero-cost collar” creates a maximum and minimum metals price for an end user, as they would simultaneously buy a call option (creating a cap, or maximum) and sell a put option (creating a floor, or minimum). The call and put premiums offset, making the construction costless. It is popular because of the upside price protection, but you sacrifice access to much lower prices if prices should fall. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (12/5/2022)

Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. 

Price Indications

Today's Charts

AEGIS Insights

12/01/2022: What's Been Driving Aluminum Prices Lately?

11/30/2022: AEGIS Factor Matrices: Most important variables affecting metals prices

11/17/2022: Do Chinese Aluminum Import and Export Flows Affect LME Prices?

11/07/2022: AEGIS Primer on LME Aluminum Price History

12/1/2022: South Korean truckers' strike cost $1.2 bln in lost shipments

12/1/2022: China set to loosen COVID curbs after week of historic protests

12/1/2022: Exclusive: China to allow home quarantine for some infected with COVID

12/1/2022: CME cobalt contract use soars above LME as big players join

11/29/2022: China property stocks surge on fundraising support; COVID protests cloud demand

11/29/2022: US HRC: Spot prices flat, mills push increases

11/29/2022: Ukraine's Metinvest says operations restored after power outages

11/29/2022: LME had regulatory obligation to be able to cancel nickel trades in March, filings say

11/28/2022: Cliffs ups flat steel spot prices by $60/st

11/28/2022: METALS-Base metals fall amid China COVID protests

11/28/2022: South Korea's striking truckers say no deal reached in government talks

Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.