The chemical industry is a large user of oil, natural gas, steam and electricity. Chemical companies also have a wide range of commodity exposures on the sell side. Benzene is an important industrial chemical that serves as a building block for many other chemicals used in a vast array of products. Examples include foam, resins, synthetic fabrics, pesticides, rubber, detergents, and lubricants. An active commodity risk management policy in your chemical supply chain is crucial.
Business improvement accross categories – KYOS portfolio & risk management system
Multiple category buyers (aromatics, olefins, utilities) profit from automated commodity market price analytical functions. Some of our clients use the KYOS portfolio & risk management system to manage a portfolio of benzene and/or hydrogen contracts. 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 portfolio & risk management system. The Chief Procurement Officer has an up-to-date helicopter overview across all categories, securing compliance & consistency. You will save valuable time by automated sharing analysis across the organisation.
Cost savings – KYOS portfolio & risk management system
Your bottom line can be affected heavily by rising costs of commodities. Suppliers of hydrogen often link hydrogen prices to natural gas. Resulting in a transparent price structure. In the KYOS portfolio & risk management system users are able to compare several commodity price formulas in a split second. Calcutating the best applicable formula takes less time then Excel based analysis. Resulting in significant lower costs with less time spend.
Managing commodity risks is inevitable for chemical companies, accurate and up-to-date information is crucial 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. ERP systems like SAP look backwards in stead off to the future and cannot perform the required risk management calculations. The KYOS portfolio & risk management system captures years of experience in managing commodity risks of the chemical supply chain. It will lead to effective hedging strategies.
Managing cashflow variance – KYOS portfolio & risk management system
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. Benzene has shown an average volatility above 30% in recent 5 years. This is more than 3 times the volatility of EURUSD in the same period. Calculating the volatility should be an integrated part of your benzene risk management strategy.
You can store in the portfolio & risk management system commodity budgets, consumption, inventory and contracts. The automated market price analytics are combined with your physical positions. It will provide you with clear insight in the current cashflow and potential cashflow variance versus budget expectations.
You will have a better insight in contracted and/or open positions, cashflows and the associated risks. This is a clear added value for procurement, sales, finance and treasury. KYOS has extensive experience with the chemical supply chain on commodity risk management..
Fixed or floating prices – Benzene risk management
As the benzene market is not that liquid managing the risks is a key task. Most contracts in this market are traded against floating prices. 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 cashflow variances. It will provide you with clear insight in the potential cashflows given any variance between fixed and floating prices. Your benzene risk management policy will be built on sophisticated calculations combined with your market experience.
Better managing your cashflow variances will lower your required working capital.
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