Paper

The paper industry is a highly energy intensive process. In many cases a Combined Heat Plant (CHP) transforms gas into power and steam. If you have an excess of power, is it possible to sell this on electricity markets. Paper companies often have plants in multiple countries meaning that they are exposed to multiple natural gas and electricity markets. It is clear that energy risk management is a top priority for the paper industry.

KYOS commodity portfolio & risk management allows effective management of your global energy contracts. For example, it lets you report on your costs broken down per country, business unit, legal entity and even per plant.

Business improvement

Multiple category buyers profit from automated commodity market price analytical functions. Each user is able to define a category specific portfolio of commodities. No more use of spreadsheets as all category buyers use the same integrated commodity & risk management system. Furthermore, the Chief Procurement Officer has an up-to-date helicopter overview and compliance and consistency is secured for all categories. You save valuable time by sharing your analysis across the organisation as multiple colleagues can view the results.

Cost savings – KYOS portfolio & risk management system

The rising costs of energy heavily affect your bottom line. The KYOS portfolio & risk management system enables you to compare several natural gas or complicated steam contracts in a split second. Calculating the best applicable natural gas index or specific steam formula takes less time then Excel based analysis. In other words: this results in significant lower costs with less time spent.

However, active managing energy risks is inevitable for the paper industry. It is crucial to have accurate and up-to-date information available to stay ahead of competitors. Managing this crucial information in Excel has proven to be a pitfall for many companies in terms of costs, mistakes, hidden risks and potential fraud. Likewise, ERP systems such as SAP look backwards instead of to the future and cannot perform the required risk management calculations. The KYOS portfolio & risk management system can help you out: it captures years of experience in managing risks of commodity contracts and market price volatility, therefore leading to effective commodity hedging strategies.

Managing cash-flow variance 

The higher and more frequent market prices move up or down, the higher its volatility. Volatility is often expressed in a percentage and can be calculated for e.g. interest rates, currencies (FX) and commodities. A highly volatile market price is not per definition a bad situation but you probably feel more comfortable with less volatile costs. In addition, calculating the volatility of gas indexes like TTF, Henry Hub or NCG should be an integrated part of your energy risk management strategy.

You can store in the portfolio & risk management system energy budgets,forecasts, actual consumption and contracts. The system combines your contracted positions with the automated market price analytics. As a result, it will provide you with clear insight in the current cash-flow and potential cash-flow variance versus budget expectations.

By automating this process you will have a strongly improved insight in the associated risks. This is a clear advantage for your company! Not only for procurement, but also for sales, finance and treasury.

Fixed or floating prices – Energy risk management

Procurement needs to find a balance between security of supply and the risks of rapidly changing market prices  The KYOS portfolio & risk management system will help you to find your “risk and reward” optimum by simulating multiple cash-flow variances. As a result, you will build your energy risk management policy on sophisticated calculations combined with your existing market experience.

In short: by better managing your cash-flow variances you will subsequently lower your required working capital.

Solutions

• Portfolio & risk management / CTRM
• End-of-Day market price forward curves
• Live market price forward curves
• Cashflow / Earnings-at-Risk

Multi-commodity risk management

• Food
• Beverage
• Chemical
• Construction
• Metals
• Paper
• Transport
• Waste
• Automotive

Publications

• White paper: Benefits of outsourcing energy analytics
• World Power: uncertainties in wind production often priced at too low levels
• Nexidus Commodities official distributor in North America
• NEVI Procurement Day 2019