Price risk management in the copper market using commodity derivatives and options strategies

Metals price risk management is a key issue related to financial risk in metal markets because of uncertainty of commodity price fluctuation, exchange rate, interest rate changes and huge price risk either to metals’ producers or consumers. Thus, it has been taken into account by all participants in metal markets including metals’ producers, consumers, merchants, banks, investment funds, speculators, traders and so on. Managing price risk provides stable income for both metals’ producers and consumers, so it increases the chance that a firm will invest in attractive projects. The purpose of this research is to evaluate risk management strategies in the copper market. The main tools and strategies of price risk management are hedging and other derivatives such as futures contracts, swaps and options contracts. Hedging is a transaction designed to reduce or eliminate price risk. Derivatives are financial instruments, whose returns are derived from other financial instruments and they are commonly used for managing financial risks. Although derivatives have been around in some form for centuries, their growth has accelerated rapidly during the last 20 years. Nowadays, they are widely used by financial institutions, corporations, professional investors, and individuals. This project is focused on the over-the-counter (OTC) market and its products such as exotic options, particularly Asian options. The first part of the project is a description of basic derivatives and risk management strategies. In addition, this part discusses basic concepts of spot and futures (forward) markets, benefits and costs of risk management and risks and rewards of positions in the derivative markets. The second part considers valuations of commodity derivatives. In this part, the options pricing model DerivaGem is applied to Asian call and put options on London Metal Exchange (LME) copper because it is important to understand how Asian options are valued and to compare theoretical values of the options with their market observed values. Predicting future trends of copper prices is important and would be essential to manage market price risk successfully. Therefore, the third part is a discussion about econometric commodity models. Based on this literature review, the fourth part of the project reports the construction and testing of an econometric model designed to forecast the monthly average price of copper on the LME. More specifically, this part aims at showing how LME copper prices can be explained by means of a simultaneous equation structural model (two-stage least squares regression) connecting supply and demand variables. A simultaneous econometric model for the copper industry is built: {█(Q_t^D=e^((-5.0485))∙P_((t-1))^((-0.1868) )∙〖GDP〗_t^((1.7151) )∙e^((0.0158)∙〖IP〗_t ) @Q_t^S=e^((-3.0785))∙P_((t-1))^((0.5960))∙T_t^((0.1408))∙P_(OIL(t))^((-0.1559))∙〖USDI〗_t^((1.2432))∙〖LIBOR〗_((t-6))^((-0.0561))@Q_t^D=Q_t^S )┤ P_((t-1))^CU=e^((-2.5165))∙〖GDP〗_t^((2.1910))∙e^((0.0202)∙〖IP〗_t )∙T_t^((-0.1799))∙P_(OIL(t))^((0.1991))∙〖USDI〗_t^((-1.5881))∙〖LIBOR〗_((t-6))^((0.0717) Where, Q_t^D and Q_t^Sare world demand for and supply of copper at time t respectively. P(t-1) is the lagged price of copper, which is the focus of the analysis in this part. GDPt is world gross domestic product at time t, which represents aggregate economic activity. In addition, industrial production should be considered here, so the global industrial production growth that is noted as IPt is included in the model. Tt is the time variable, which is a useful proxy for technological change. A proxy variable for the cost of energy in producing copper is the price of oil at time t, which is noted as POIL(t ) . USDIt is the U.S. dollar index variable at time t, which is an important variable for explaining the copper supply and copper prices. At last, LIBOR(t-6) is the 6-month lagged 1-year London Inter bank offering rate of interest. Although, the model can be applicable for different base metals' industries, the omitted exogenous variables such as the price of substitute or a combined variable related to the price of substitutes have not been considered in this study. Based on this econometric model and using a Monte-Carlo simulation analysis, the probabilities that the monthly average copper prices in 2006 and 2007 will be greater than specific strike price of an option are defined. The final part evaluates risk management strategies including options strategies, metal swaps and simple options in relation to the simulation results. The basic options strategies such as bull spreads, bear spreads and butterfly spreads, which are created by using both call and put options in 2006 and 2007 are evaluated. Consequently, each risk management strategy in 2006 and 2007 is analyzed based on the day of data and the price prediction model. As a result, applications stemming from this project include valuing Asian options, developing a copper price prediction model, forecasting and planning, and decision making for price risk management in the copper market.

Syntheses and structures of molybdenum and tungsten complexes capable of epoxidaton and copper coordination polymers and dendrimers

We are interested in the syntheses of new complexes and in their characterization by single crystal X-ray diffraction techniques. Once we understand the structures, studies aimed at understanding uses of these complexes in the field of catalytic epoxidation using complexes soluble in water and syntheses of thin films (not assessed) were conducted. The syntheses, characterization and catalytic properties of a series of mononuclear, dinuclear and tetranuclear molybdenum and tungsten oxo complexes are described. The syntheses and structural characterization of two copper coordination polymers with 3,5-dihydroxylbenzoate ligand, and five paddlewheel shaped copper dendrimers coordinated with Fréchet-type dendrons are also detailed. The background of this dissertation is outlined in Chapter 1. Chapter 2 describes the syntheses, and characterization of two new mononuclear molybdenum(VI) and tungsten(VI) oxo complexes, MoO2Cl2(OPPh2CH2OH)2, and WO2Cl2(OPPh2CH2OH)2, bearing hydrophilic phosphine oxide ligand. The catalytic properties of these complexes for the epoxidation of cis-cyclooctene were also studied. Two new dinuclear molybdenum(VI) and tungsten(VI) oxo complexes Mo2O4Cl2[(HOCH2)PhPOO]2, and (CH3O)2(O)W(μ-O)(μ-O2PPh2)2W(O)(CH3O)2, bearing organophosphinate ligand are described in Chapter 3 and 4. Chapter 4 and 5 describes the syntheses and characterization of tetranuclear molybdenum(V) oxo complexes bearing various organophosphinate ligands. The catalytic abilities of these complexes for the epoxidation of cis-cyclooctene in the presence of hydrogen peroxide as oxidant were explored as well. Various spectroscopic methods, such as IR, UV-vis, and NMR are used to characterize the nature of these complexes. Crystal structures of compounds MoO2Cl2(OPPh2CH2OH)2, WO2Cl2(OPPh2CH2OH)2, Mo2O4Cl2[(HOCH2)PhPOO]2, (CH3O)2(O)W(μ-O)(μ-O2PPh2)2W(O)(CH3O)2, and Mo4(µ3-O)4(µ-O2PR2)4O4 (R=Ph, Me, ClCH2, o-C6H4(CH2)2) are also presented. The syntheses, and structural characterization of three copper(II) coordination polymers bearing 3,5-dihydroxybenzoate ligand are described in Chapter 6. Two copper(II) coordination polymers, [Cu2(3,5-dhb)2(pyridine)4]n, and [Cu2(3,5-dhb)4]n were afforded based on different amount of pyridine used in the reaction. The structures of these complexes are further built into 2D or 3D networks via inter or intra hydrogen bonds. The syntheses and structural characterization of the zinc(II) monomer, Zn(3,5-dhb)2(pyridine)2 is also described in this Chapter. Chapter 7 describes the syntheses, and characterization of five dendronized dicopper complexes bearing different generations of Fréchet-type dendrons. The structures of 3,5- bis(benzoyloxl)benzoic acid, 3,5-(PhCOO)2PhCOOH (G1), Cu2(3,5-dhb)4(THF)2, Cu2(G1)4(pyridine)2, and Cu2(G1)4(CH3OH)2 were characterized unambiguously by single X-ray diffraction. In addition, all compounds were characterized by FT-IR, UV-vis spectroscopy and elemental analyses.

Gender on the Range: Feminine Strategies in the 1913 Michigan Copper Strike

In the autumn of 1913, a small, remote Michigan mining community attracted national attention as miners and management found themselves embroiled in a conflict that would prove no easy victory for either side. The strike came as a shock to management, who, with the help of a nearly perfected paternal system, had come to expect a generally docile and compliant workforce. But what was even more shocking was the involvement of the miners’ wives in the strike effort, and the lengths they went to in order to keep men from crossing the picket line. This paper focuses on that effort, arguing that the women of the Michigan copper country developed strike strategies that were derived from their domestic experience, and justified their involvement through maternal arguments. However, these public actions allowed the management to disregard the respect and courtesy generally given to the domestic sphere as police and private agents perpetrated a number of home invasions in an attempt to break the strike. The involvement of women in male dominated labor disputes (mining, steel productions) has been largely ignored in the literature due to their indirect connection to the company as wives and not workers. This paper seeks to remedy this gap, and gain a better understanding of that indirect relationship. Sources include newspaper articles, private correspondence, public investigation records, and oral histories, found largely in the Michigan Tech Archives and Copper Country Historical Collections, Michigan Technological University, Michigan.

Copper Range Railroad General Freight Department Rules and Regulations

http://digitalcommons.mtu.edu/copper_range/1000/thumbnail.jpg