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Fifth Third Bank's Commodity group offers a line of financial hedging solutions and techniques to help you effectively manage your company's risk exposure.
It all starts with a conversation—a conversation about your exposures. Then our team will help you create custom strategies to mitigate the impact these risks can have on your company. In turn, you will be able to do what you do best: run your business.
We take a personalized approach.
Our clients often work with the same trader for years and frequently interact with senior management. That's because our professionals pride themselves on customer relationships—and Fifth Third Bank's ability to execute large transactions.
Commodity Risk Management Solutions
The values of energy and metals can fluctuate drastically, causing increased operational costs and margin concerns.
Fifth Third Bank offers commodity risk management products and solutions to help mitigate the risk and manage volatility in many industries.
Financial Hedging Instruments
Fixed Price Swap
The fixed price commodity swap is an agreement to buy or sell at a fixed price in the future versus the floating price index. Consumers have full upside protection from price increases and a known price for budget purposes. Producers conversely have full protection from downside price movement and can lock in margins to production costs.
Due to high volatility in commodities, options are often used as frequently as fixed price swaps. Options are simply the right, but not the obligation to buy (or sell), at a fixed price on a specific future date.
- Call options. Consumers typically look to cap their price exposure to a specific commodity for a period of time.
- Put options. Used by producers to limit or create a floor to downward price movements on their commodity selling price. Put options can also be used to limit the downside on the value of inventory that a producer or recycler may hold for a period of time.
- Collars. Can be created by using both a call and a put to create a range of prices that the user will experience over the length of the hedge. Collars are most often set to a zero cost.