Download Responding to New Market Volatility

Responding to New
Market Volatility
New capabilities for pricing, trading and risk
management can help steel producers protect
margins and pursue high performance
Four major developments are driving
a significant increase in the price
volatility of both steel products and
steelmaking raw materials. First among
these developments is the overall
financial and economic volatility across
the globe. Secondly, global markets are
increasingly subject to emerging country
macroeconomic decision making that is
prone to frequent, abrupt changes. The
third factor driving a significant increase
in price volatility involves timing. The time
frame for raw material pricing contracts
has shifted from annual to quarterly,
monthly or even shorter periods. Finally,
global steel industry consolidation has
stalled, increasing competitive intensity
in the face of weak demand and making it
more difficult to remove excess capacity.
The increase in volatility in recent years
can be seen in Figure 1, which shows the
quarterly percent price deviation from
the prior 12-month average for selected
commodities. Managing this increased
volatility has become a major day-to-day
challenge for steelmakers. Additionally,
it is eroding investor confidence in the
industry’s ability to manage the spreads
between input costs and output prices,
which is essential to generating adequate
returns over the cycle.
In this paper, we discuss the impacts
that increased volatility has on steel
companies; the issues and challenges
that need to be addressed in adopting a
more proactive posture toward the use of
emerging tools and financial instruments;
and the key capabilities that companies
need to build as they enter this world.
Regardless of the rate at which tradable
exchanges for steel inputs and products
develop and gain acceptance, Accenture
believes that companies that build
advanced risk management and trading
capabilities will enjoy a first-mover
advantage and be better positioned to
prevail in this era of increased volatility.
As a result, debate is intensifying as to
the best ways for steel companies to
respond and, in particular, whether the
industry should actively embrace futures
markets and other hedging mechanisms,
or rather wait to see how they mature.
Figure 1. Metals price volatility (1990-2012).
100%
60%
40%
20%
0%
-20%
-40%
-60%
Steel (HRC)
Iron Ore
Source: Accenture research.
1
Thermal/coking coal
Dec 12
Jan 12
Feb 11
Mar 10
Apr 09
May 08
Jun 07
Jul 06
Aug 05
Sep 04
Oct 03
Nov 02
Dec 01
Jan 01
Feb 00
Mar 99
Apr 98
May 97
Jun 96
Jul 95
Aug 94
Sep 93
Oct 92
Nov 91
Dec 90
-80%
Jan 90
Percent departure from previous 12-month average
80%
Increased volatility adding to pressure on
steelmakers
The fundamental challenge posed by
increased volatility results from the
persistent potential for asynchronous
pricing movements since the timing
of changes in market prices of raw
materials and steel are rarely in sync.
An increase in the spot or quarterly
contract price of iron ore does not imply
that a corresponding increase in sales
price for steel can be achieved in the
same time horizon. Although volatility
may also benefit steelmakers (as when
steel prices rise faster than raw material
costs), industry experience suggests these
conditions occur less frequently and are
shorter in duration.
As a consequence, steel companies are
exposed to a number of adverse impacts,
including:
Accelerated commoditization—Steel
companies have long battled against
commoditization by emphasizing attribute
uniqueness and differentiated services.
In a highly fragmented industry, the
high number of competitors frequently
undermines attempts at differentiation.
Increased pricing volatility potentially
accelerates commoditization by
heightening the focus of price in
commercial negotiations to the detriment
of other considerations such as product
attributes, service differentiation and
total cost of ownership.
Structural margin erosion—
Commoditization and asynchronous
pricing movements put a squeeze on
steel company margins. Producers, in
effect, become cost-plus converters of
raw materials with insufficient “plus” to
generate adequate shareholder returns.
Moreover, customer pressures for longerterm product pricing agreements can
further squeeze margins.
Diminished forecasting ability—Price
volatility on both sides of the millconversion equation undermines earnings
stability and visibility that can weaken
the ability to secure financing. Other
commodity industries where earnings can
be forecasted more reliably and hedged
from unfavorable market conditions
are potentially more attractive to
sophisticated, risk-conscious investors.
While these challenges affect the
steel industry as a whole, there are
differential impacts across individual
steel producers based on their product
mix, market position and technical
and operating capabilities.
Building momentum to take action
For company leaders beginning to see
the need for better pricing management,
the place to start is by understanding
the basic concepts of commodity
trading and risk management, as well as
comprehending the potential benefits.
Steel producers need to see this issue
at a strategic level. What is needed,
first of all, is acceptance among top
executives across the procurement,
planning, commercial and financial
organizations that the enterprise has
lost some power and market control,
and that something needs to be done
to avoid giving up more ground.
Many other industries—agribusiness,
copper, oil, aluminum, gas and
power—have faced similar challenges
related to commoditization and lack
of pricing power. After surmounting
early resistance to change, companies
built trading and risk management
capabilities to protect their revenues,
stabilize performance and reassure
investors. They also created increasing
demand for financial instruments
that are in common use today.
Experience from other industries suggests
that there are measurable benefits to
be derived from active (and intelligent)
participation in market exchanges and use
of price risk management tools. Later in
the paper, we discuss how some of these
benefits may be materialized in the steel
industry, but first we need to consider the
general topic of risk.
2
Escaping upstream?
In response to increased volatility and the upstream shift in margin
capture, many steelmakers are actively attempting to acquire mines.
The logic of this strategy is straightforward. However, the reality is that
raw material self-sufficiency will remain unattainable for most steel
producers due to a scarcity of quality mine development opportunities,
as well as severe competition for those properties from sovereign wealth
funds and established mining companies with deeper pockets and existing
leveragable infrastructures. At the same time, the recent—and perhaps
protracted—decline in raw material prices due to China’s economic
slowdown highlights the inherent riskiness of a “be the company”
upstream integration strategy.
Even as the mining industry adds more capacity in the coming years, the
industry structure and market dynamics are expected to remain intact,
thus perpetuating pricing volatility.
In this context, all steel producers—even those with some measure of
self-sufficiency—need to look to other mechanisms to manage volatility.
3
Rethinking risk and risk management
Assess appetite for risk
A key early step in building organizational
consensus is to assess and articulate the
company’s appetite for risk. For example,
is the enterprise engaging in commodity
trading to reduce risk of loss or eroded
margin due to unfavorable market price
movements (pure hedging)? Or is there
a desire to take views on future price
movements or attempt to extend margins?
This can be thought of as a risk appetite
scale. At one end are the risk-averse
companies, where an enterprise seeks
to reduce, or remove entirely, exposure
to market price volatility. These types
of companies are termed “volatility
minimizers.” At the opposite end of the
scale, those companies that seek financial
gain from taking on exposures and
confidently invest capital (“risk capital”) in
market positions are termed “market makers
and speculators.”
The middle band is populated by those
companies that seek to take on some risk,
but with the agreed strategy of optimizing
the value and earnings from their inherently
natural market positions. Those positions
usually arise from asset ownership and the
need to convert materials in terms of form
and value. In all examples along this scale
of reducing or taking on risk, companies
are required to complete some commercial
activity, and this is essentially through
engaging in hedging and trading.
The risk appetite also should not be
classified exclusively according to the
degree of speculation an enterprise wants
to take. Rather, it should be based on an
appraisal of the competitive landscape
and the insights on how markets for raw
materials and products are developing.
Implementing a risk
management and control
framework
Regardless of a company’s chosen risk
profile, hedging and trading capabilities
require a risk-control function that is not
incentivized by favorable market price
movements. Internal controls should be
designed to enable risks to be taken within
established boundaries that confirm limits
to potential downside financial outcomes,
as well as support the transparent pursuit of
profit-enhancing opportunities. Essentially,
the trading activity needs to be part of a
comprehensive framework for enterprise risk
management that interlocks the concerns
of more enterprise-wide activities governing
finance; industrial operations; logistics;
counterparty performance; health and
safety; environment and sustainability; and
corporate relations, as well as the causal
commercial execution of procurement, sales
and trading.
of a portfolio of varied but interrelated
positions throughout the value chain, linked
by a common denominator of measurable
commodity market exposure.
The risk framework is the means by which
categories of risk are measured and
controlled, aligned to the risk appetite.
It consists of clearly defined policies
and directives that disseminate into
measurements of risk, limits to risk levels
using those measurements and how those
limits are quantified and applied to any
sub-categories of the organization such
as business units, divisions and portfolios.
Operational processes and procedures
enacted by specific roles and responsibilities
are also defined, including key roles that
sit within the trading function tasked with
executing daily commercial market activity
that manages the risk. Meanwhile, a risk
control function monitors and analyzes
the frequently changing risk profile of
the enterprise’s exposures and confirms
compliance with policy. Segregation
of these two key types of roles are an
important principle in whatever scale or
design of organization structure is most
suitable for the particular enterprise.
• Influence produce vs. buy decisions to
protect or enhance economic value.
Developing a trading
function
These activities all include focus on the core
component of setting prices. The focus then
shifts to what actions are needed to enact
risk management strategy and, finally, to
taking those actions. In many cases, these
actions would involve entering into further
transactions with other counterparties,
including non-industry market participants
such as financial institutions and
commodity exchanges that provide a
means to offset price risks via hedging.
Essentially, the trading unit becomes the
operational mission control for enlivening
the commercial aspects of risk management
strategy and supporting more confident
forward planning of production schedules
and steel output.
With a strong risk management and
control framework in place, the next step
is to develop and begin to implement
a business unit or function to handle
trading and hedging for the organization.
For optimal benefits, the trading unit
must be thoroughly integrated with the
business. It serves as the interface between
procurement, production planning and
sales and marketing. A core commercial
component the trading unit handles is
one of setting the pricing of raw material
purchases, product sales and commoditymarket hedges that then become part
Built upon a core of managing pricing and
associated risk, there are many activities
that trading units perform to improve and
assure results. Some or all of the following
apply to specific companies, depending on
their level of integration throughout the
steel value chain:
• Manage pricing and timing of raw
material purchases.
• Recommend and execute medium- and
long-term hedging strategies, such as
locking in raw material-to-product
spreads where differentials are favorably
wider than when budgeted or forecasted.
• Innovate in product pricing. For example,
through offering flexibility of volume
and price to customers and capturing the
value that such flexibility introduces.
• Decompose structured sales contracts
into commodity-market transactions
that serve as hedges so as to provide
offsetting value should sales prices in the
future move unfavorably.
• Disseminate information gained from
daily activities in globally linked markets
that may greatly assist the enterprise’s
short- and medium-term strategy.
• Provide input to forecasting, planning and
budgeting functions.
4
Considering what constitutes speculation
Some steel company leaders may worry that adding trading capabilities
will be seen as encouraging speculation. “We don’t want a bunch of
casino people in here,” might be the argument.
The reality is that doing nothing or conducting business as usual in the
face of increasing market volatility is already a form of speculation—
just not an overt one. On the most basic level, it represents a bet
that conditions will revert to the old ways or at least swing in a more
favorable direction.
Every time a steel company enters into a sales contract at a fixed price
without a corresponding fix on raw material costs, it is making a bet that
its costs will be below what is required to generate its target margin.
Executives might believe raw material costs will decline, but this amounts
to operating on hunches. And likewise when the company locks in a raw
material supply contract in the face of steel market uncertainty, it is
betting on its ability to cover margins through higher sales prices.
In contrast, hedging of assets and commitments presents far better
mitigation to new market volatility than taking no action at all. To avert
“casino behavior,” organizations can develop procedures that integrate
business intelligence, risk controls and oversight.
5
Benefiting from new tools
and instruments
as well as the timing of when the prices are
fixed on each side. Where a raw material
(iron ore) shipment price is fixed at a
different point in time to the sales price of
steel output, the facilities of a commodity
market via purchase or sale of financial
hedging contracts can be used to lock in
a margin between raw material cost and
product sale.
Until recently, there were virtually no
means to hedge in the steel industry
because of a lack of trading tools. Now
a variety of financial instruments exist,
and many are similar to what has proved
valuable in other commodity markets such
as base metals, oil, energy products and
agricultural resources.
For example, a typical steel mill may
hedge by buying “financial” iron ore
swap contracts to lock in the purchase
cost of its core raw material at the time
when a steel product sales price is fixed
with a customer. Conversely, when the
purchase price of its iron ore shipment is
fixed with its supplier, the mill could use
an exchange hot roll coil, billet or rebar
contract to lock in a “proxy” sales level of
its product by selling that corresponding
financial contract. The delivery months
of trades executed in each case can be
chosen in such a way as to account for
production schedules and lead times (for
example, March 2013 on the iron ore
Commodity exchanges and financial
organizations have established tradable
financial contracts that can serve as iron
ore, coking coal and steel hedging offerings.
(See far-left column in Figure 2.) Pricing
platforms are available for upstream as well
as for downstream transactions.
If the core strategy of steel companies is to
protect margins from erosion, then this can
be aided by establishing a link between sales
prices and raw materials costs wherever
possible—and vice versa. This linkage can
be in terms of both input and output prices,
side and May 2013 on the product side).
The principles of this approach leverage
the price structure of the commodity
market in the forward price curve and
the differentials between the iron ore
and steel product prices for a given price
point/delivery date pairing.
The reality is that steel products
are characterized by a wide variety
of specifications, while commodity
exchange futures and swaps contracts are
limited to a narrow selection of median
specifications. This should not be an
excuse for avoiding the use of benefits
these hedging illustrations present. Other
well-established commodity markets also
have wide varieties of specifications. But
premium and discount structures evolve
relative to the core commodity index, and
participants routinely avail themselves of
the protection such hedging offers.
Figure 2. Simple hedging potential in the iron ore to steel value chain.
Time flow—processing chain
T0
Iron ore miners
T1
T2
Iron ore
Steel output
Steel mills
Physical contracts
Physical contracts
Price fix on ore spot price at T1
Price fix on steel spot price at T2
Financial Contracts
ICE, NYMEX-CME, SGX
Banks and brokers
Financial Contracts
LME, NYMEX-CME, NCDEX,
MCX, SHFE, DGCX
These hedges illustrate potential for
the mill to take advantage of
favorable financial market prices to
lock in a margin in advance of any
physical material pricing.
The ore hedge at T1 only applies as
an unwind of an ore financial
position exists from buy hedge at TO.
Lock-in margin
Buy
hedge on ore
forward price
Sell/unwind
hedge on ore
spot price or proxy
for ore blast date
T0
Steel stockists
and users
Sell
hedge on steel
forward T2 price
T1
Sell or (roll)
hedge on steel
forward T2 price
T2
Buy/unwind
hedge at steel
spot price
The sell steel hedge at T1 is
fundamental to protecting margin
and locks a spread based on
physical ore cost. If done at TO it is
“rolled” to further date if necessary.
The buy/unwind steel hedge at T2
closes the financial steel sale/short
position opened at T1.
Source: Accenture research.
Note: CME – Chicago Mercantile Exchange; DGCX - Dubai Gold & Commodity Exchange; ICE – Intercontinental Exchange; LME – London Metal Exchange; MCX
– Multi Commodity Exchange of India Ltd.; NCDEX – National Commodity & Derivatives Exchange Ltd.; NYMEX – New York Mercantile Exchange; SFX – Shanghai
Futures Exchange; SGX – Singapore Exchange.
6
7
Potential benefits
Greater flexibility
Some exchanges and financial players
provide facilities for warehousing,
delivery and financing of the commodity.
Producers can sell standardized grades
of production into the exchange when
lulls in demand occur or when customers
request delayed delivery.
This activity occurs on the London Metal
Exchange (LME) with other metals and
now extends to steel billet. It presents
an alternative sales channel for product
and even provides improved cash flow
and reduced payment delays or defaults,
as the exchanges are generally backed by
financially sound cash-clearing facilities.
Conversely, the same warehousing can
provide a source of product to buy
back when production outages occur
or demand ramps up ahead of output
schedules or raw material availability. In
times of increased demand in base metals
markets, exchange warehouse stocks have
been the source of material for the very
producers who made it.
Having options on when and where to
deliver or receive materials can be a
differentiator in serving customer
needs and can be a decisive factor in
contract negotiations.
Protect and enhance
margins
Some steel industry participants will
not be satisfied with merely protecting
revenues. In a globally competitive,
shareholder return driven landscape, they
are considering enhancements to profit
potential. Commodity market pricing can
enable such opportunities through the
very volatility companies seek to manage.
Reshaping the terms on how steel
producers set prices by using marketreference pricing can provide
opportunities to manage and improve
margins. These tools can provide
opportunities to lock in lower prices on
the buy side or higher prices on the
sell side.
Using widely available published
references, commodity market-based
pricing introduces improved transparency.
The relationship between future raw
material costs and sales revenues can
be largely fixed today; the alternative is
that one or both sides of the equation are
left open and suffer the consequences
of uncertain future price directions. This
approach might be a more opportunistic
move than the spread mechanism used to
lock in a margin defensively.
First-mover advantage
Trading platforms and financial
instruments are evolving to suit the needs
of market participants. Perceived pain
points typically result in new products
and services being developed to provide
relief. To date, trading offerings are
fairly regional in focus and no single
platform dominates. (See Figure 3.)
Also, based on some attributes of steel,
including heterogeneity of products
(even at the semi-finished stage)
and the tendency of some products
to degrade over time in storage,
the adoption of large-scale trading
exchanges faces severe challenges.
Whatever the speed of steel commodity
market evolution, Accenture believes
those enterprises that embrace the
changes early on and develop strategies
and business enablers accordingly are
likely to benefit the most.
For most companies, the cultural
change will be significant. The earlier
that companies take initial steps, the
more embedded the needed capabilities
will be when the market ‘tipping point’
occurs. Companies late to the game will
be at a competitive disadvantage when
commodity pricing and risk management
have permeated the industry. The leaders
will have more developed capabilities,
systems and experience to reap a larger
number of benefits. They also will be
further along the scale of maturity and
sophistication in price risk management,
and better placed to shape the next wave
of competitive practice in commercial
transaction structuring.
Growing coverage of
hedging instruments
Executives have recognized the
importance of fuller coverage of the
materials portfolio of steel mills. As a
result, the available contracts offered by
exchanges on their own trading platforms
and as centrally cleared, over-the-counter
contracts now extend to a wider range of
raw materials, including coking coal and
ferrous scrap.
Provision of existing energy derivatives
and freight futures and forwards also
extends the mix of total coverage of
the typical steel-related risk portfolio.
Further depth and flexibility is provided
by options contracts on iron ore and HRC,
which were introduced in 2011.
Essentially, options provide, at a cost,
the means to participate in favorable
price moves while simultaneously locking
in levels that protect from unfavorable
moves. It remains to be seen when the
industry will reach the level of portfolio
risk management sophistication to realize
the benefits associated with collective
use of all such tools.
8
Figure 3. Exchanges and banks offer growing number of instruments for trading and risk management.
Market Commodity Grade
Platform
Venue / Contract
Region of Product
Platform Type
Contract Forward Delivery Reference / Fixing Region of
Size
Intervals &
Price Index at
Commodity
Horizon
Settlement
Delivery
Settlement (physical
delivery or financial)
ICE (OTC)
Iron ore
62% Fe
Fines
Global
Over the
counter (OTC)
swap
1,000 MT
Monthly out to 24
months
Platt’s iron ore 62%
CFR China – month
average
CFR China
Cleared OTC financial
NYMEX
CME
Iron ore
62% Fe
Fines
Global
OTC swap *
1,000 MT
Monthly out to three Platt’s iron ore 62%
calendar years
CFR China – month
average
CFR China
Cleared OTC financial
NYMEX
CME
Iron ore
62% Fe
Fines
Global
OTC swap *
500 MT
Monthly out to three TSI iron ore 62% CFR
CFR China
calendar years
China – month average
Cleared OTC financial
SGX
Iron ore
62% Fe
Fines
Singapore
OTC swap
500 MT
Monthly out to 48
months
Cleared OTC financial
SMX
Iron ore
62% Fe
Fines
Global
OTC index
(Singapore)
100 times Monthly out to six
index price months
MB iron ore 62% CFR
Qingdao – month
average
CFR China
Exchange cleared
financial
Banks,
Brokers
Iron ore
62% Fe
Fines
Various
OTC swap
1,000 MT
Monthly
TSI, Platt’s, others
CFR China
Cleared via LCH Clearnet
OTC financial
NYMEX
CME
Coking coal
Australian Global
HCC
64 mid
volume
OTC swap
1,000 MT
Monthly to
24 months
Platt’s month average
FOB Australia
Cleared OTC financial
NYMEX
CME
Coking coal
Australian Global
Premium
HCC low
volume
OTC swap
1,000 MT
Monthly to
24 months
1) Platt’s
FOB Australia
Cleared OTC financial
TSI iron ore 62% CFR
CFR China
China – month average
2) Argus
month average
NYMEX
CME
Steel Scrap
US
#1
Ferrous
Busheling
Exchange
Cleared Swap
Futures
20 Tons
Monthly to 24
Months
AMM US Midwest #1
Busheling
Midwest US
Exchange Cleared
Financial
NYMEX
CME
Steel scrap
MS I & II
80:20
Europe
OTC swap
50 MT
Monthly to
24 months
Platt’s month average
CFR Turkey
Cleared OTC financial
LME
Long steel
Billet
GOST
380-94
Global
(London)
Exchangecleared
futures
65 MT
LME settlement price
Daily to three
at Expiry
months, weekly to
six months; monthly
to 15 months
LME warehouse
Europe, Far East
Physical delivery on
matured open positions
NYMEX
CME
Flat steel
Domestic
HRC
US
Exchange20 short
cleared swaps * ton
Monthly to
24 months
CRU US Midwest
domestic HRC index
Midwest US
Exchange cleared
financial
NYMEX
CME
Flat Steel
HRC
Europe
OTC Swap
50MT
Monthly to 24
months
Platt’s Months Average Ex Works, Ruhr
Cleared OTC Financial
NYMEX
CME
Long steel
Billet
Europe
OTC swap
100 MT
Monthly to
24 months
Platt’s month average
FOB Black Sea
Cleared OTC financial
NYMEX
CME
Long Steel
Rebar
HRB400
China
OTC Swap
100MT
Monthly to 12
months
MySteel HRB400
Month Average
China
Cleared OTC Financial
DGCX
Long steel
Rebar BS
4449 W
460 B
Dubai UAE
Exchange10 MT
cleared futures
Monthly to four
months
DGCX settlement price Dubai
at Expiry
SHFE
Long steel
Rebar
Shanghai
Exchange10 MT
cleared futures
Monthly to
12 months
SHFE settlement price
at Expiry
Listed warehouse Physical
China
SHFE
Long steel
Wire rod
Shanghai
Exchange10 MT
cleared futures
Monthly to
12 months
SHFE settlement price
at Expiry
Listed warehouse Physical
China
NCDEX
Long steel
Ingot /
Billet
India
Exchange10 MT
cleared futures
Monthly to five or
six months
NCDEX settlement price Ghaziabad, plus
at Expiry
others
MCX
Long steel
Ingot /
Billet
Mumbai
Exchange10 MT
cleared futures (max.
trade size
applies)
Monthly out to three MCX settlement price
to four months
at Expiry
Ghaziabad, plus
others
Physical delivery on open
matured positions
Physical delivery on open
matured positions
Physical delivery on open
matured positions
*Denotes options contracts are also available.
Note: CME – Chicago Mercantile Exchange; DGCX - Dubai Gold & Commodity Exchange; ICE – Intercontinental Exchange; LME – London Metal Exchange; MCX
– Multi Commodity Exchange of India Ltd.; NCDEX – National Commodity & Derivatives Exchange Ltd.; NYMEX – New York Mercantile Exchange; SFX – Shanghai
Futures Exchange; SGX – Singapore Exchange. Updated as of February 2013.
9
Building trading and risk capabilities for a
new era
Steel companies have an opportunity
to improve performance by adapting to
the new era of price volatility. Use of
emerging hedging tools can enable this
transition, and companies need to begin
developing their capabilities to benefit
from use of these new instruments. These
capabilities are essentially about being
in a position to identify, measure and
manage risks arising from price volatility
in a regular and repeatable manner.
Managing those risks is best achieved
through assigning responsibility to a
controlled commercial function, which
executes contracts in the markets to
offset or transform the risk, traditionally
termed the trading function. The benefits
include revenue protection, enhanced
visibility into future cash flow and
improved ability to forecast earnings and
anticipate investor concerns.
Doing so will move the enterprise forward
from reliance on a cost-plus model.
This step can help protect margins from
intense and increasing global competition
in both raw materials and finishedproduct markets. In the coming years,
integrated trading and risk management
approaches are likely to become standard
practice for leading steel producers.
There are several organizational and
operational considerations that contribute
to successfully implementing effective
trading and risk management capabilities.
As well as the strategic and commercial
aspects outlined in this paper, there
are designs to be made regarding the
organizational and capital structure
of the enterprise, in addition to the
operating model and people, processes
and technology platforms that best
support delivery of that strategy. There is
no one generic, off-the-shelf model that
guarantees quick implementation, but the
most suitable and effective models will
be delivered by those steel enterprises
that take positive steps to recognize the
challenge, begin to expend the effort
and design what is appropriate for them.
The alternative of waiting and watching
while markets become no less forgiving or
volatile is no longer an option.
About the authors
James Ghazala is based in London and
leads the metals and mining focus
of the Commodity Trading and Risk
Management group, as well as being
involved with client engagements in the
energy space. His experience spans 20
years in commodities, commencing as
a physical metals trader and marketer
having daily dealings with industrial
producers, consumers and merchants,
as well as with the metals futures and
options markets. This experience has
been followed by roles in consultancy
and investment banking centered on
enabling metals and energy businesses
to expand, improve and adapt their
trading portfolios and risk management
capabilities through applying his
firsthand understanding of commodities
business strategies and market
structures, as well as the platforms
on which the business is processed.
[email protected]
John E. Lichtenstein is the Managing
Director of the Accenture Metals industry
group. He has more than 20 years of
experience as an industry executive
and consultant to the global metals and
mining industries. He works with leading
companies in the areas of strategy,
technology, mergers and acquisitions,
globalization and business transformation.
He is a recognized specialist on industry
issues, has written numerous articles
for industry publications and regularly
appears as an invited speaker at World
Steel Association, China Iron and Steel
Association and Brazil Steel Institute
events, as well as the Steel Success
Strategies conferences.
[email protected]
10
About Accenture
Accenture is a global management
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outsourcing company, with approximately
259,000 people serving clients in more
than 120 countries. Combining unparalleled
experience, comprehensive capabilities
across all industries and business functions,
and extensive research on the world’s
most successful companies, Accenture
collaborates with clients to help them
become high-performance businesses and
governments. The company generated
net revenues of US$27.9 billion for the
fiscal year ended Aug. 31, 2012. Its
home page is www.accenture.com.
If you have a QR reader installed on your
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taken directly to the Accenture Metals page:
www.accenture.com/metals
This document is produced by Accenture as
general information on the subject. It is not
intended to provide advice on your specific
circumstances. If you require advice or further
details on any matters referred to, please
contact your Accenture representative.
Copyright © 2013 Accenture
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