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Zinc Aluminum Copper Steel China. EMERSON COMMODITY HEDGING LIMITATIONS. Limit direct material hedging to 14 months (vs. two years currently). Should allow time to adjust pricing as necessary. Continue to follow the band strategy for direct material hedges:

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Presentation Transcript

  • Zinc

  • Aluminum

  • Copper

  • Steel

  • China


Emerson commodity hedging limitations
EMERSON COMMODITY HEDGING LIMITATIONS

  • Limit direct material hedging to 14 months (vs. two years currently).

    • Should allow time to adjust pricing as necessary.

  • Continue to follow the band strategy for direct material hedges:

    • Hedge 20 – 90% of exposures for up to 14 months.

    • Hedging range driven by timing of next expected price increase and the risk of price rollbacks if commodity prices fall.

    • Exposure related to annual price agreement can be hedged at time of agreement.

Direct Material



Zinc Market

LME Price Curve

  • LME 3 Month Buy 7/28 at $0.83 / lb


Aluminum Market

LME Price Curve

  • LME 7/28 3 mo buy at $1.35 / lb


Copper Market

LME Price Curve

  • 3 Month Copper LME price 7/28 at $3.62/ll


Yearly Market Price

Fin Rev Current

Market Market Delta

Zinc 1.48 0.83 (.65)

CU 3.40 3.62 .22

AL1 1.21 1.35 .14

AL2 0.98 1.18 .20








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