...KPIs of Century Aluminum Some of the key determinants of our results of operations and cash flow from operations are as follows: Pricing: Increases or decreases in primary aluminum prices result in increases and decreases in Century Aluminum revenues (assuming all other factors are unchanged). The company may enter into forward contracts or other hedging arrangements to reduce its price risk, but did not hold any such contracts as of December 31, 2014. The average LME price for primary aluminum for 2014 was $1,867 per tonne, compared to $1,846 per tonne in 2013. The average regional delivery premiums increased in 2014 to $450 per tonne for the U.S. Midwest premium from $244 per tonne in 2013 and $218 per tonne in 2012. The company’s operating results are significantly impacted by changes in the price of primary aluminum and the materials used in its production, including electrical power, alumina, aluminum fluoride and carbon products; and it cannot pass thease additional costs to its consumers. Instead, the company tries to manipulate the prices through the use of fixed costs, negotiating LME-based pricing in some of the raw materials and electrical power contracts. Power supply agreements: Century Aluminum has put some much effort in negotiating power contracts within the regions they operate in. For example, the company managed to secure a power contract with a local supplier to sell to Hawesville plant at market price. This gives the company some room when it comes...
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...Aluminum Assignment 2. We predict in the next several years that the primary aluminum demand will increase, but at a slower rate that it has been historically. * We predict a temporary increase in aluminum pricing due to production restrictions imposed by CIS and US producers beginning in 1994. However, the price reduction will be temporary, as the LME warehouses have inventory at historic highs of 2.5 thousand tons of aluminum, which could be sold at any time. Furthermore, the US has agreed to temporarily idle production of 950 thousand tons of aluminum in an attempt to inflate prices. However, this is a short term solution, as production cannot be idled for a long period of time without severe damage to the aluminum production line. * The consumption of aluminum by the Western world has increased over the last 5 years, but at a much slower rate than in the past 10 years. Additionally, the secondary aluminum market has been increasing, and serves as competition for the primary aluminum market. By 1994, the secondary aluminum made up 25% of worldwide product and saw a 5 year CAGR of 3.7%, while the CAGR for primary aluminum had decreased to a rate of 1.4% worldwide. The startup cost for a secondary aluminum plant is far lower than that of a primary aluminum plant. The operational cost of the secondary aluminum plant is far lower than that of a primary aluminum plant, requiring about 5% of the energy needed to operate a primary aluminum plant. As a result, there will...
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...The Aluminum Industry in 19941 and Aluminum Smelting in South Africa: Alusaf’s Hillside Project2 1) Is primary aluminum production an attractive industry? Why or why not? Within the framework of the Structure-Conduct-Performance (SCP) model3, the primary aluminum production industry (“the industry”) in 1994 can be described as perfectly competitive. The industry is characterized by a large number of competing firms – the largest of which has only 4.1% of total industry capacity; homogeneous, commodity-type products and low-cost entry and exit into and out of the industry (assuming capital is available where returns are greater than cost of entry). Within the industry, market prices are established via a commodities exchange (the London Metal Exchange, or LME) and individual firms have little ability to set market prices. In a perfectly competitive industry social welfare is maximized – due largely to the lack of product differentiation and the number of competitors, while expected firm performance is normal. In the early 1990’s the collapse of the Soviet military caused Russian and other Soviet State smelters to flood the market with capacity that had previously supplied military needs. During 1993, LME inventories of primary aluminum increased by nearly a million tons, to over 2.5 million tons, while producer inventories increased by over 300,000 tons. This surge in supply & inventory levels drove world aluminum prices to all-time lows - $1,110/ton at the end...
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...non-ferrous metal in the world and the most liquid contract traded on the LME. Aluminium is extremely light, pliable, has good electrical conductivity and is resistant to corrosion. It is used in a wide variety of products: cans, foils, window frames, car body panels,wiring and kitchen utensils. World aluminium production 2011 Region | % | Asia | 55% | Europe | 20% | America | 16% | Oceania | 5% | Africa | 4% | Source: WBMS www.world-bureau.com Industry consumption 2011 Market Sector | % | Transport | 25% | Construction | 25% | Packaging | 17% | Electrical | 12% | Machinery & equipment | 10% | Consumer durables | 6% | Other | 6% | Every metal traded on the LME must conform to strict specifications regarding quality, lot size and shape. Each LME tradeable contract is likewise governed by rules covering (but not limited to) prompt dates, settlement terms, traded and cleared currencies and minimum tick size. Contract specifications Law / Regulation English Law, with regulation by the LME and the Financial Conduct Authority (FCA). This is a summary of the contract specifications. LME contracts may only be offered or sold to United States foreign futures and options customers by firms registered with the Commodity Futures Trading Commission (CFTC), or firms who are permitted to solicit and accept money from foreign futures and options customers from trading on the LME. * Physical Quality | Primary aluminium with impurities no...
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...primary aluminum smelter, a 466,000-ton-per-year facility at Richard’s Bay, a deepwater port on the east coast of South Africa’s province of Kwa-Zulu Natal. Alusaf was the sole primary aluminum producer in South Africa, operating 170,000 tpy of capacity at the existing “Bayside” facility at Richard’s Bay. Alusaf’s 1993 revenues were $220.2 million, up 1% from 1992. Income was $8.6 million, up 122% from 1992. A feasibility study for the proposed “Hillside” smelter had been completed over the past two years. During this time, South Africa’s political regime had undergone a dramatic transformation with the 1993 passing of the Transitional Executive Council (TEC) Bill. This bill removed absolute power from the hands of whites and created a multi-racial body that would share responsibility for organizing and overseeing the general elections to be held in April 1994. Within days, Nelson Mandela, leader of the African National Congress party, addressed the UN Special Committee Against Apartheid in New York, calling on the international community to lift sanctions against South Africa. The European Union, the Organization of African Unity, Canada, China, Sweden, Singapore, India, and the United States all responded quickly with announcements that they would begin the process of restoring normal economic relations with South Africa. Aluminum prices had fallen dramatically since the feasibility study was begun, as Russian aluminum continued to flood the market. Now, with aluminum prices...
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...primary aluminum smelter, a 466,000-ton-per-year facility at Richard’s Bay, a deepwater port on the east coast of South Africa’s province of Kwa-Zulu Natal. Alusaf was the sole primary aluminum producer in South Africa, operating 170,000 tpy of capacity at the existing “Bayside” facility at Richard’s Bay. Alusaf’s 1993 revenues were $220.2 million, up 1% from 1992. Income was $8.6 million, up 122% from 1992. A feasibility study for the proposed “Hillside” smelter had been completed over the past two years. During this time, South Africa’s political regime had undergone a dramatic transformation with the 1993 passing of the Transitional Executive Council (TEC) Bill. This bill removed absolute power from the hands of whites and created a multi-racial body that would share responsibility for organizing and overseeing the general elections to be held in April 1994. Within days, Nelson Mandela, leader of the African National Congress party, addressed the UN Special Committee Against Apartheid in New York, calling on the international community to lift sanctions against South Africa. The European Union, the Organization of African Unity, Canada, China, Sweden, Singapore, India, and the United States all responded quickly with announcements that they would begin the process of restoring normal economic relations with South Africa. Aluminum prices had fallen dramatically since the feasibility study was begun, as Russian aluminum continued to flood the market. Now, with aluminum prices...
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...1. Introduction: In June 1997, board of the International Finance Corporation (IFC) was proposed with a $120 million debt-side investment opportunity in the Mozal project, a $1.4 billion aluminum smelter in Mozambique. The initiative shareholders approached IFC for their participation in debt-side financing in pursue of the commercial viability and development impact. In this report, we will be analysing the project’s major risks that are expected to arise in the future, as well as assessing the likelihood of a successful investment from various aspects, until reaching a final lending decision. In addition, loan portfolio considerations regarding the addition of the new investment will be discussed. 2. Major risks In this part of the report, the 3 major risks involved in the Mozal project are assessed, including political risk, operational risk and market risk. 2.1. Sovereign risk Comparing to other two types of risks, sovereign risk is relatively higher and more important in the Mozal case, with potential expropriation and moral hazard being realistic threats to the project. Mozambique was one of the poorest countries in the world and had only recently emerged from a 17-year civil war that had destroyed most of the country’s infrastructure. The high sovereign risk is reflected in the hurdle rate that amounts to a much higher value than its internal rate of return. Regarding the financing gap of $250m, participation of IFC is essential and could be very beneficial to the...
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...Graduate School of Business MGEC 501 Levent Koçkesen The Aluminum Industry in 1994 • Aluminum smelting is a perfectly competitive industry: 157 smelters worldwide in 1993 • Traded at London Metal Exchange (LME) • Price in 1988 over $2,500 per ton • Price at beginning of 1994 about $1,100 per ton • Mainly due to the collapse of the Soviet Union and the resulting flood of aluminum into the world markets by the Commonwealth of Independent States (CIS) 1 Annual Average Primary Aluminum Price (Dollars per metric ton) 3000 2500 2000 1500 1000 500 0 1970 1975 1980 1985 1990 1995 • • • • 1971-74: price controls. 1973-75: OPEC oil embargo and increase in oil prices 1986-88: Supply shortages 1991: Soviet Union Collapse Alusaf’s Hillside Project • At the beginning of 1994, Alusaf was considering to build the world’s largest smelter (466,000 tpy) at Richard’s Bay in South Africa • A feasibility study was done two years before, but since then the Russian flood had occurred. • Capital cost was projected to be $1.6 billion • Aluminum prices at about $1,110 • Alusaf had long-term contracts that ensured perton alumina and power costs at 41% of aluminum price • Should Alusaf go ahead with the project? How can we use supply-demand analysis to understand price dynamics? How does this help in entry decisions? 2 Smelting Process • • • • • Smelting is the process of extracting aluminum metal from aluminum oxide (alumina) through electrolytic reduction. The fundamental...
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...University Graduate School of Business MGEC 501 Levent Koçkesen The Aluminum Industry in 1994 • Aluminum smelting is a perfectly competitive industry: 157 smelters worldwide in 1993 • Traded at London Metal Exchange (LME) • Price in 1988 over $2,500 per ton • Price at beginning of 1994 about $1,100 per ton • Mainly due to the collapse of the Soviet Union and the resulting flood of aluminum into the world markets by the Commonwealth of Independent States (CIS) 1 Annual Average Primary Aluminum Price (Dollars per metric ton) 3000 2500 2000 1500 1000 500 0 1970 1975 1980 1985 1990 1995 • • • • 1971-74: price controls. 1973-75: OPEC oil embargo and increase in oil prices 1986-88: Supply shortages 1991: Soviet Union Collapse Alusaf’s Hillside Project • At the beginning of 1994, Alusaf was considering to build the world’s largest smelter (466,000 tpy) at Richard’s Bay in South Africa • A feasibility study was done two years before, but since then the Russian flood had occurred. • Capital cost was projected to be $1.6 billion • Aluminum prices at about $1,110 • Alusaf had long-term contracts that ensured perton alumina and power costs at 41% of aluminum price • Should Alusaf go ahead with the project? How can we use supply-demand analysis to understand price dynamics? How does this help in entry decisions? 2 Smelting Process • • • • • Smelting is the process of extracting aluminum metal from aluminum oxide (alumina) through electrolytic reduction. The fundamental component...
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...Submitted to: Submitted by: Prof. Murali Murti Chandan Kumar Chand (1PI11MBA41) CONTENT 1. Introduction to the Company: a. History b. Present status in industry c. Summary of business areas and products / services d. Organization structure e. Marketing & Sales Organizational Structure 2. Structure of the industry: f. Size and growth rates g. Major players 3. Buyer behavior in the industry: h. Typical buying centre and characteristics for the industry i. Zinc Users around the world 4. Market segments and positioning: j. Market segments in the industry k. Segments addressed by the subject company l. Positioning adopted in each segment 5. Products / Services strategies 6. Channel and Distribution strategies 7. Pricing Strategies: m. Pricing determinants for industry n. Pricing strategies of company 8. Place 9. Consolidated SWOT analysis of company’s marketing operations 10. Financial Scorecard 11. Operational Scorecard 12. Recommendations for the future 1. Introduction to the Company History * An integrated mining and resources producer of zinc, lead, silver and cadmium. * Hindustan Zinc (HZL) was incorporated from the erstwhile Metal Corporation of India on January 10, 1966 as a Public Sector Undertaking. * A subsidiary of Vedanta Resources PLC. The world's...
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...Aluminum Industry in 1994: Long Run Supply and Equilibrium Managerial Economics Alp Atakan This material is for the exclusive use in MGEC classes at Koc University. No other use is allowed without my permission. 1 Road Map • • Why is the price of Aluminum so Volatile? • Demand analysis Long-Run Supply Curve – – – – – Difference between short-run and long-run supply curves ATC and the exit price FR-ATC and the entry price Building the long-run supply curve What drives the long-run price path in a commodity market? 2 Demand Curve Answers the Question: What Quantity Will be Demanded at Different Possible Market Prices? Movements along a given demand curve tell us how quan4ty demanded changes with respect to changes in the good’s price P0 Price ($ per unit) P0 Shi7s in the demand curve tell us how quan4ty demanded changes with respect to changes in demand drivers other than the good’s price (e.g, income) P1 D X0 X1 Quan?ty (units per period) X0 X2 D0 D1 Measure of sensi4vity: price elas:city of demand % QD = % P QD /QD dQD P = ⇥ D P/P dP Q % QD = % Y Measure of sensi4vity: other elas:ci:es ...
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...Aluminum Industry in 1994: Long Run Supply and Equilibrium Managerial Economics Alp Atakan This material is for the exclusive use in MGEC classes at Koc University. No other use is allowed without my permission. 1 Road Map • • Why is the price of Aluminum so Volatile? • Demand analysis Long-Run Supply Curve – – – – – Difference between short-run and long-run supply curves ATC and the exit price FR-ATC and the entry price Building the long-run supply curve What drives the long-run price path in a commodity market? 2 Demand Curve Answers the Question: What Quantity Will be Demanded at Different Possible Market Prices? Movements along a given demand curve tell us how quan4ty demanded changes with respect to changes in the good’s price Price ($ per unit) P0 Shi7s in the demand curve tell us how quan4ty demanded changes with respect to changes in demand drivers other than the good’s price (e.g, income) P0 P1 D0 D X0 X1 Quan?ty (units per period) Measure of sensi4vity: price elas:city of demand % QD = % P QD /QD dQD P = ⇥ D P/P dP Q X0 X2 D1 Quan?ty (units...
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...A PROJECT REPORT ON COPPER: THE BROWN GOLD Submitted to the Mumbai University in partial fulfillment of the requirement for the award of M.M.S. Degree GUIDE MR. SANJIV BARVE by SURESH CHANDRAN MMS - FINANCE ATHARVA INSTITUTE OF MANAGEMENT STUDIES MALAD-MARVE ROAD, MALAD (WEST), MUMBAI 400095 BATCH 2006-2008 CERTIFICATE This is to certify that the project entitled “COPPER: THE BROWN GOLD” is the bonafide work carried out by Mr. Suresh Chandran, student of M.M.S. Batch 2006-2008, Atharva Institute of Management Studies, during the year 2007-2008 in partial fulfillment of the requirements for the Post Graduate Degree of Master of Management Studies and that the project has not formed the basis for the award of any other degree, associate-ship, fellowship or any other similar titles. Sd/- Mr. Sanjiv Barve Project Guide & Faculty Member Atharva Institute of Management Studies Date: Place: ACKNOWLEDGEMENT I would like to take this opportunity to express my sincere and heart-felt gratitude towards my institute, Atharva Institute of Management studies for giving me this wonderful experience to guide my first steps into a Career in Finance. I express my appreciation towards our Dean, Mr. N. S. Rajan, who believed in me and provided me with a great learning canvass to expand my perspectives and learning horizons. I offer my sincerest thanks to my eternal academic guiding star, Mr. Sanjiv Barve, my project guide for his immense help. His guidance...
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...Abraham Trading Company provides commodity exposure with an established manager who has more than 23 years of experience of systematic trading in the global commodity markets. February 2011 SUITE 2000 100 CONGRESS AVENUE AUSTIN, TX 78701 (512) 370-5234 PROFESSIONAL MONEY MANAGEMENT IN GLOBAL MARKETS SINCE 1988 MOODY BUILDING SECOND & MAIN CANADIAN, TX 79014 (806) 323-8000 IMPORTANT NOTICE These materials do not constitute an offer of securities. Such an offer will only be made by means of a confidential private placement memorandum to be furnished to qualified prospective investors. This document is confidential and is intended only for the information of the person to whom it was delivered. This document is not to be reproduced or transmitted, in whole or in part, without the prior written consent of Abraham Trading Company. ABRAHAM TRADING COMPANY PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS WWW.ABRAHAMTRADING.COM 1 BACKGROUND OF ABRAHAM TRADING COMPANY • Salem Abraham began managing customer accounts using his systematic approach in January of 1988 and in 1990 organized Abraham Trading Company to act as a CTA for all customer accounts. • In 2005, started doing extensive research in multiple strategies. • In January 2006, became a multi-strategy firm by implementing medium term trend and long only stock strategies. • In September 2007, added mean reversion and short term momentum strategies. • Named to the Barron’s Top 100 Hedge...
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...INDIAN SCHOOL OF BUSINESS MANAGEMENT & ADMINISTRATION PROJECT REPORT On A FRAMEWORK OF “SUPPLY CHAIN MANAGEMENT” Submitted for the Partial fulfillment towards the award of the degree in MASTER OF BUSINESS ADMINISTRATION Submitted By Under the Guidance of SHARATH HS Roll Number: Session – 2013-14 PREFACE This report has been written in response to a comprehensive study, conducted on the “SUPPLY CHAIN MANAGEMENT” of “HINDALCO INDUSTRIES LIMITED”. The report mentions and evaluates the various aspects, pertaining to the distribution channel of the company. ACKNOWLEDGEMENT At the onset I must bow down in reverence to the almighty that blessed us with the understanding & prevalence that is needed in this kind of project report. With great pleasure I express my heartiest thanks to Dr. Diwakar Shetty without whose unrelated support and guidance, this project would just not have been possible. I am very thankful for his invaluable guidance, support, and affable & friendly nature. He/She guided me at each and every stage of project. I am equally indebted to my friends who always inspired and motivated me to do something better through...
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