A global petrochemical producer was facing challenges in procuring natural gas liquids (NGL) and managing the associated price risks. These challenges directly affected their feedstock costs and profit margins, creating a need for a more effective procurement strategy and a reliable method to hedge against NGL price fluctuations.
Physical & Financial Strategy
The company turned to Mobius Risk Group for their expertise in commodity risk management. The initial step taken by Mobius involved a thorough assessment of the company's current NGL procurement processes. The goal was to optimize their approach to buying butane, propane, and ethane, ensuring they could secure these essential feedstocks at more favorable terms and prices.
Additionally, Mobius developed and implemented a comprehensive hedging program for butane, propane, and ethane. This program was designed to mitigate the company's exposure to fluctuating NGL prices. By utilizing a range of hedging tools and financial instruments, Mobius was able to provide the company with a more predictable cost base for their feedstocks.
The implementation of these improved procurement strategies and the new hedging program had a significant impact on the petrochemical company. They achieved greater predictability in their feedstock costs, which, in turn, led to less volatility in their profit margins.
This outcome not only stabilized the company's financial performance but also provided a competitive edge in the petrochemical industry, where feedstock price volatility can be a challenge. The project showcased Mobius Risk Group's ability to create tailored solutions that address specific challenges in commodity procurement and risk management.
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