The main benefit of swaps is the ability to fix the net price paid / received for steel products or scrap metal, thus stabilising profit margin.
There are several advantages to stabilising margin including:
1. Access to greater levels of finance / leverage
2. Improved forecasting / planning
3. The ability to take on greater operational risk (since financial risk is diminished) – i.e. by being able to reliably commit to more competitive and longer term, fixed-rate off-take agreements
Each of these advantages offers participants an enduring competitive advantage over their peers.
This webinar covers a basic introduction to the process and advantages of risk management as well as a review of the options currently available for the risk management of steel, iron ore and scrap metal.