Trading Aluminum Futures
- Thread starter cashmoney69
- Start date
I thought he was picking up cans on the beach.
I'd still like to know how this contract trades...anyone know?
the big volumen is in the london metal exchange.
The Open Interest in Aluminium right now is 670,615 contracts. the daily vol ave is about 170k
The Open Interest in Aluminium right now is 670,615 contracts. the daily vol ave is about 170k
If you want to trade the physical market, you should know that the best defence against opportunistic scrap dealers is to negotiate deals that tie scrap payments to a published index, and insist each invoice show a photocopy of the relevant data.
Of course, it is also prudent to check the dealers' relevant data now and again against an independent source of pricing information (another trade journal or a website such as www.Propurchaser.com or www.scrapindex.com/metal.html ).
Finally, make sure you are being paid for all your scrap. Indexed pricing works only if the weights are correct. Here are two ways to check:
1-Pre-weigh your scrap at your premises and check your numbers against the figures the dealer uses to calculate payment. If weighing each load is difficult, do it randomly, making sure the dealer does not know which loads are checked.
2-If weighing in-house is not practical, use a public facility. Make sure you choose the public scale (and change it occasionally). Randomly ask the driver to get weighed on his way back to his yard. Have the stamped, signed weigh ticket sent directly to you. Of course, the dealer will know this particular load has been weighed, so catching irregularities means looking for longer-term trends, i.e., checking if pre-weighed loads are generally heavier than those that do not go to a public scale.
Beware the dealer who promises to give you higher than market prices: this simply cannot be done -- at least not without cheating.
Companies Like Alcoa can buy you'r scrap at a very fair price.
Of course, it is also prudent to check the dealers' relevant data now and again against an independent source of pricing information (another trade journal or a website such as www.Propurchaser.com or www.scrapindex.com/metal.html ).
Finally, make sure you are being paid for all your scrap. Indexed pricing works only if the weights are correct. Here are two ways to check:
1-Pre-weigh your scrap at your premises and check your numbers against the figures the dealer uses to calculate payment. If weighing each load is difficult, do it randomly, making sure the dealer does not know which loads are checked.
2-If weighing in-house is not practical, use a public facility. Make sure you choose the public scale (and change it occasionally). Randomly ask the driver to get weighed on his way back to his yard. Have the stamped, signed weigh ticket sent directly to you. Of course, the dealer will know this particular load has been weighed, so catching irregularities means looking for longer-term trends, i.e., checking if pre-weighed loads are generally heavier than those that do not go to a public scale.
Beware the dealer who promises to give you higher than market prices: this simply cannot be done -- at least not without cheating.
Companies Like Alcoa can buy you'r scrap at a very fair price.
I would recommend that you fully understand the entire delivery process and contract specifications for both the AL contracts on NYMEX and LME. If you are unable to meet the exact requirements and contract criteria for making delivery than I wouldn't even think about moving any further. This is not an easy process by any means but good luck...
Does someone from the exchange come down to a persons
business to inspect the goods?........... ALSO
where else do farmers, cattle producers ect sell their goods if its
NOT on the futures markets?. You say it's not easy by any
means, so what happens to the mom-and-pop farm or ranch that
only own a few acres and cant provide the "size" the contracts
require?
It might surprize you but most small medium farmers dont hedge in the futures market. I know quite a few farmers and none use futures for a number of reasons mainly cash flow, lack of size and lack of knowledge but mainly because their business is the land.
Mate if you want to become the next aluminium baron in the footsteps of Roman Abramovich (you probably never heard of him I am sure) be my guest. I just wonder what next weeks get rich quick scheme will be!!! They say a little bit of knowledge can be dangerous in the wrong hands and if you are having trouble in this business I have a feeling the metals magnate game is even tougher.