Foreword
By Charlotte James, Production & Sales Director.

The Coming Energy Winter
Oil prices have replaced those of houses/real estate in many lay conversations. Even sales of fuel-efficient hybrid cars in the US have taken off as motorists anticipate that US$40-60 oil prices are here to stay - perhaps rising much further. Global growth prospects are set to slow; the airline industry is being "destroyed"; and the US dollar remains vulnerable, probably sending prices still higher. Guy Isherwood, editor, looks at the theories surrounding the current oil cycle and what could come next.
By Guy Isherwood, Commodities Now.

Life on Hedge Row
The average hedge fund manager just happens to be much smarter than the average journalist.
By Cai Palmer, Managing Director, Court Cavendish Consultancy.

The Plastic Dynamic
In late 2003 when the London Metal Exchange (LME) announced that it was planning to introduce plastic futures to trade alongside the Exchange's well established base metal contracts, it initiated a debate that shows no sign of waning. James Roberts & Joanna James of LME Ring Dealing Member, Sucden consider the key issues raised by the launch of the LME's plastics contract.
By James Roberts & Joanna James of LME Ring Dealing Member, Sucden.

Airlines Hedging Strategies: The Shareholder Value Perspective
Airlines, particularly those in the United States, continue to suffer from high jet fuel prices. Hedging is often touted as the solution to this problem, but can be a double-edged sword for those who are not clear about why they are doing it.
By Carlos Blanco, John Lehman & Naoki Shimoda.

Tin - Well Worth the Wait
The tin market had to wait much longer than the other base metals to enjoy the fruits of the bull market. Essentially, tin prices on a monthly average basis trended lower from the August 1995 peak of US$ 6,992/tonne to a low over six years later of US$ 3,695/tonne (September 2001). The fundamentals of the tin market during the 1990s and in the early part of this decade were very different to today..
By Neil Buxton, GFMS Metals Consulting.

Tin: Price Behaviour Contrasted
Base metals have notoriously volatile price behaviour (Table 1), under the conflicting influences of market fundamentals, speculative activity and price manipulation. There are also conflicting approaches to understanding the base metals' patterns of price variation. The mining and metals industries tend to focus on cycles of production-consumption imbalances and the resulting stock change, which they term the 'fundamentals'.
By Peter Hollands, Adam Sotowicz, Mire Zloh & Leon Westgate, of Bloomsbury Minerals Economics (BME).

PGMs to Remain in Balance: Near-Term Price Improvements Unlikely
Chinese jewellery demand and the fortunes for diesel autocatalysts remain the key drivers for platinum prices. But price improvements for palladium remain remote.
By Guy Isherwood, Commodities Now.

Silver Salvation?
Investors have been driving silver prices ever higher. According to the Silver Institute World Silver Survey 2005 (prepared by the consultants GFMS), the foundations for continued strength could be in place. And the underlying trend in fabrication demand remains positive, regardless of the secular decline in photographic uses. There is also some scope for a recovery in jewellery sales, as well as the possibility of exchange traded funds (ETFs) for silver which could also attract more investment.
By Silver Institute World Silver Survey 2005.

The Rise of carbon Credit Procurement Vehicles
Companies facing carbon dioxide restrictions can use credits from the Clean Development (CDM) and Joint Implementation (JI) mechanisms to meet their current or anticipated emission targets. However, direct investments in these emission reduction projects are plagued by high risks and the time horizon on the investment is sometimes very long. Some companies might be looking at CDM or JI projects in their internal operations, but for a large number of companies it will make sense to have someone else make these investments on its behalf. This is where carbon funds and purchasing pools come into play, providing an investment opportunity that can provide carbon credits or cash returns.
By Andreas Arvanitakis & Henrik Hasselknippe, Point Carbon.

Pipeline & Storage Companies Gear Up
The new reality of the energy market brought about by increasing demands on all participants in the market - traders, asset owners or both - are bringing dramatic changes in gas trading and scheduling activities.
By Matthew Frye, OpenLink.

Managing Risk With Forward Freight Agreements
The growth in the demand for goods in Asia particularly has increased participation as well as prices for Forward Freight Agreements (FFAs). Adam Sonin highlights these changes and the development of more efficient markets.
By Adam Sonin, Head of Shipping Derivatives for ACM/GFI, London.

Electricity Prices Vary Widely Across Europe
The UK enjoys some of the lowest electricity prices in Europe. The large variations across countries is testament that liberalised markets still have some way to go before a more uniform electricity price emerges. And expectations are that spot electricity prices will continue to rise as gas prices particularly remain on a up-trend.

Modular Global Sourcing - An Imperative for the ETRM Industry
In our previous article1 ETRM - Top 5 IT Imperatives, we articulated key business imperatives and the resultant top IT imperatives for the ETRM2 sector. This article, in continuation, delves deeper into the imperative of scalability. In its quest to achieve straight-through-processing (STP) and zero-tolerance culture towards compliance, control and data integrity, the ETRM sector is witnessing a surge of multiple intertwined IT initiatives. These range from small ROI-justified projects to huge projects in the risk and operations domain spanning multiple geographies and internal business units.
By Naren Koduvattat, Rahul Shah & Balaji Yellavalli, Infosys Technologies.

Kiodex Sees Continued Growth for Energy Market Participants
Kiodex has made significant progress with its Application Service Provider (ASP) approach to delivering energy trade management, risk management and other tools, delivering a web-based platform that transforms risk into a strategic advantage. Energy trading, and commodities trading in general, has increased significantly since the beginning of the decade. Banks and hedge funds (as well as other new entrants) have taken a growing interest in the revitalised commodities sector as global merchandise trade has increased and developing nations continue to expand rapidly. Corporations and hedge funds around the world use Kiodex services to manage commodity price risk and to comply with best accounting practices. Its customers are leaders in the brokerage, hedge fund, energy, transportation, and chemical sectors.
By Raj Mahajan, Kiodex President.