FUTURES HEDGING - Ni & 304

INTRODUCTION OF FUTURES HEDGING

1. The price of 304 scrap is pretty volatile as it is inevitable to be affected by the fluctuation of nickel price and currency rate which are main factors of the pricing of 304 scrap.
2. In order to accomplish the ever-earning transactions, FUTURES HEDGING is recommended to lock in a certain price and guard against the possibility of falling prices.
3. The simultaneous trade contracts of 304 scrap, Nickel futures and Currency futures will guarantee the margin of trade since 304 scrap price and Nickel futures largely offset each other with gain and loss.

CALCULATION OF FUTURES HEDGING

Please fill in the blanks in the below sentences step by step. (Price: price at my yard, current but referential only)

*MCC: My Country Currency (ex. If MCC is USD, the value is 1.)

1. Currency Exchange rate is MCC/USD.
2. Nickel price is USD/MT now.
3. At what price do I have to buy 304 scrap in order to make a profit of % and/or USD/MT.
*My 304 buying price:
MCC/MT &
USD/MT
(USD20 for Scrap Processing cost and USD60 for Shipping cost are earmarked. They can be altered in the Calculator.)
4. In case I purchase MT of 304 scrap, I want to know the below quantity and amount.
*Total quantity of Nickel for a Selling Futures contract:
MT
*Total amount of a Selling Currency Futures contract: MCC
& USD
5. I want to assess 304 selling price and the earnings in case Nickel Price becomes USD/MT later.
*My 304 selling price:
MCC/MT or
USD/MT
(It is necessary to sell off a Ni futures contract at the same time when 304 Scrap is sold.)
*Nickel Future Profit or Loss: USD
*304 Scrap Profit or Loss: USD
*Prearranged Profit: USD
*Final Profit after settlement: USD

* You can modify the values and calculate again for your own price

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