Non-ferrous metals and ferro-alloys: forecasting,forward currency cover,and purchasing tactics and strategy

Abstract

It is argued that all companies for which non-ferrous metals and ferro-alloys are an important determinant of production costs should establish a Materials Working Group to help protect profitability. Such companies must examine their critical materials, calculating the impact of major fluctuations, and cover them by inventory, contracting, or forward-purchasing adjustments. This will involve making assumptions about world growth rates and changing exchange rates, and using markets such as the London and New York metal exchanges. A simple forecast is presented of changes in metal prices and exchange rates for 1982–83. Ways of establishing a Materials Working Group and making it effective are suggested.