Commodity risk management

Help limit the impacts of price movements in key commodities

Protecting your business against commodity price fluctuations is an important part of business planning; adopting a commodity price hedging strategy is one of the ways that you could choose to help your business guard against commodity price uncertainty. Our commodity derivative solutions allow you to fix a commodity price for a specified future period, giving you the ability to plan ahead, as well as limiting the effects of any future price movements. Our swaps are available in energy, base metals and agricultural commodities.

Our commodity risk management solutions feature the following:

• Pre-planning - allowing you to budget commodity cost and revenue in advance
• More control - limit the financial impact of commodity fluctuations
• Comfort - knowing exposure to price movements is limited
• Tailoring – structure the most appropriate protection for your business needs
• Limitation – you will no longer be able to participate in favourable commodity price movements beyond certain levels
• Available for a variety of commodities including, energy (ultra-low sulphur diesel (ULSD), gas oil and jet fuel), base metals (aluminium, copper, zinc, lead, nickel and tin), agricultural (wheat and cotton)

Important facts

• All trades are cash settled. There is no physical delivery of the commodity
• Maximum term of 5 years dependent on specific commodity
• Minimum deal value applies, subject to status
• You must enter into an ISDA Master Agreement, published by the International Swaps & Derivatives Association, which outlines the terms applied to the transaction, in advance of any trade execution
• Credit line may be required. Ask relationship manager for details.
• Please be aware that by transacting certain derivative structures with us, you will no longer be able to take advantage of favourable market moves. Full details are available from your Treasury Solutions Manager
• A break cost, which could be significant, may be payable if you seek to break the terms of the contract
• Further information is available on request

Key information documents

Key information documents for the products we offer are provided below to allow you to consider the benefits, costs and suitability in line with your requirements prior to purchasing of any of these products.

Our general terms of business for professional and retail clients and Best Execution Customer Summary are also provided for your information.

• Aluminium swap
• Cotton swap
• Copper swap
• Diesel (ulsd) swap
• Gasoil swap
• Jet fuel swap
• Lead swap
• Nickel swap
• Tin swap
• Wheat (cbot) swap
• Wheat (liffe) swap
• Wheat (matif) swap
• Zinc swap

Additional solutions

• Foreign Exchange risk management