Metallgesellschaft AG (MGAG) was formerly an industrial conglomerate with 251 subsidiaries. Their United States (U.S.) subsidiary, Metallgesellschaft Refining and Marketing (MGRM), was responsible for U.S. petroleum markets. In December 1993, MGRM reportedly lost $1.3bn.
In December 1991, MGRM’s management team - led by A.Benson - key marketing strategy was to offer long-term customers fixed price guarantees for up to ten years on petroleum products. This is known as short positions on long-term forward contracts. Short position implies that MGRM were selling the commodity with the expectation that prices will fall; it’s sold via a forwards contract, a privately agreed contract to sell the commodity at a predetermined price and date in
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MGRM held futures amounting to 55m barrels whilst entering into Over-The-Counter (OTC) energy swaps amounting to 110m barrels. These privately negotiated swaps are agreements, allowing counterparties to swap commodities at a floating price for a fixed price. MGRM hedged long-term oil commitments against spot oil price increases on a one to one basis, by purchasing a “stack” of short-term futures equivalent to their remaining delivery requirements. Meaning that MGRM placed an entire hedge in short dated contracts as opposed to spreading it out over a longer duration, settling the expiring instruments then using the proceeds to purchase new instruments. Instead of purchasing and storing oil for future sales, MGRM adopted a synthetic storage strategy, allowing them to store oil supplies via futures without having to physically store any. Allowed MGRM to capitalize on their skills of extracting maximum profits from marketing oils without the gamble on direction of spot rates.
Nevertheless, the fluctuant nature of the energy sector saw markets shift from backwardation to contango. Contango exists when the spot price is lower than the futures price. This meant that MGRM’s long futures were being rolled over into the next set of “stacked” positions, with losses. As a result, these unrealized “rollover losses” incurred huge margin calls. These calls are a demand by NYMEX, for when a deposit of cash is required to bring the account balance up to its
In order to ensure a reduction in the impact of rising crude oil prices on our company, we will take several actions to ensure that the impact of crude oil prices will not be more affected. First, we will raise the selling price by a small amount to compensate for the loss of government contracts. By raising the price to make up for the losses caused by the financial. Of course, this method has a certain risk, because if the increase is too large, the buyer may not buy from us here, so this can only micro-adjustment, can not improve too much. Second, we will need to control costs, starting from most places to ensure that can make up for financial shortfalls. Third, we will communicate with customers, such as we will take a range range of price fluctuations, and customers that will not exceed the range will not fall out, so that customers have a psychological bottom line. Thus ensuring that traffic will not lose. Fourth, we will be a large sum of money and bank loans, this is a last resort. Not to the last minute try not to use, although the reality may not be ideal. We can increase production in this way, and when prices fall, we can hedge, so that when prices rise, can produce more revenue to
Based on the 1988 Supreme Court case of Corn Product Refining Co. v. Commissioner (350 U.S. 46; 76 S.Ct. 20; 100 L.Ed. 29), hedging transactions were determined to be used to support business practices of certain commodities. Such hedging transactions are normal for businesses engaged in commodity sales such as coal or corn to protect against market
Slawsa is a condiment revolution in taste and texture that is in a category all its own. This product was recently introduced to us by Julie Busha. Julie took an old family recipe and decided it was so good it should be marketed, and that is just what she did. Slawsa is owned by “The Busha Group, LLC” and registered though and manufactured for “Nicole Foods”, located in Cramerton, North Carolina. What started out as a simple recipe for the family has changed the way the world will now look at condinments in the future.
* Hedging. Hedging with the fuel market could save enough money in one year to offset the next year’s fuel supply and costs.
Primary apprehension of a corn seller is decline in the price commodity which will impact his revenues negatively. Short position in corn futures will lock in the future price of the corn and will guarantee the locked price of the commodity, irrespective of the actual market price of the
Strategy used by the natural gas traders: One common strategy is to bet on the price of futures for the winter contract months. Many factors can influence the price of winter contracts, for e.g., a strong hurricane season that disrupts supplies just before winter. Traders who believe either a cold winter or a strong hurricane season will occur will take a long position in winter future contracts.
Schneider Electric is an aggressive company when it comes to mergers and acquisitions. It reserves part of its entire revenue every year to fund and reinforce its strategy in this area, and has constantly acquired companies throughout its history. Pre-2000 Acquisitions Schneider Electric started as a wartime armaments provider before refocusing itself onto the electrical industry in postwar Europe. It separated from the iron and steel industry to do so. It acquired Telemecanique in 1988, Square D in 1991, Merlin Gerin in 1992, and Lexel in 1999. These acquisitions mark the transition of SE’s industry focus from construction to electrical equipment. Advantages These strategic acquisitions helped Schneider gain advantages in the fields of circuit breakers and switchgear. Telemechanique for example, was the inventor of the first switch and already had patents in their name when SE acquired them. They were already present in 11 European countries and the United States by the time the acquisition happened in 1988. This gave SE geographic advantages in circuit breaker industry as well. Telemechanique retains its prestigious brand name (Telemechanique Sensors) to this day.
Communication in the organization assists the organization to implement the strategic objectives, building the organizational brand and finally create an economic value (Grant, 2016). Cooperate communication is a set of activities that are used in managing and orchestrating the internal and external communication that has the objective of creating favorable starting points with the stakeholders who include customers, employees, governments, international organizations and the partners among others whom the company depend on (Reilly, 2014). Stakeholders are any group or individuals who have effects on the achievements of the organization objectives (Amaladoss, 2013).
Mighty Mug SS(0.47 litre) which will draw more attention towards desk-bound workers, selling at $19.99USD. Both models will be priced at $35.00 to sell in Singapore.
Commodity futures have become very powerful instruments that are being used by many for varied purposes. They provide excellent opportunities to hedgers and speculators. In this regard the exchanges have been trying to develop varied types of products that satisfy the ever growing needs of the futures markets. Futures contracts provide a number of benefits including price discovery, volume (liquidity), and risk transfer through hedging, to name a few. There are also indirect benefits to the economy like the creation of warehouses that store the commodities being traded.
To avoid the risks associated with fluctuating freight rates and volatility as witnessed over the last couple of years, companies must ensure that they consider hedging. Hedging helps in controlling the cash inflow and outflow as dictated by both internal and external parameters (Kavussanos & Visvikis 2006). Operating costs, which is affected by among other things bunker prices, should be addressed through hedging to ensure that companies maximize their profits and that the share prices remain competitive and profitable.
Both buyers and sellers have a reasonable assurance that prices marked to HH or NBP are competitive. In sharp contrast, Table 1 Regional pipeline natural gas trade (bn cu m) Regions North America Europe Algeria Russian Federation Others 2004 121.78 154.17 34.32 148.44 43.35
The past decade has been characterized by a high degree of volatility in global oil prices, beginning with a significant increase in 1999 that continued to accelerate until 2003, reaching an unprecedented pricing level of $145 a barrel in July 2008 (Ono, 2011). The Great Recession appears to have stunted this acceleration in oil prices, though, at least in part and
Surprisingly, oil traders have changed their behavior in the Q2 this year. However, professionals were not taken by surprise. The OPEC and Saudis new investment fund have been sending signals to keep our eyes opened. Three stories
The Company has been facing many challenges that led it to bankruptcy. The struggle of the Company led it to attain a market share of 19.6 percent in the year 2011. This market share dropped in the year 2012 to 17.9 percent. This has been caused by the stiff competition that the Company face from the competitors. According to the research, the performance of GM in the market is not promising has it faces a stiff competition from the Japanese Company.