Berkeley helped this global chemicals company to launch futures contract trading and manage their risks more effectively.
Where were they?
Price volatility in the polymers markets, combined with a lack of appropriate instruments to manage this risk, had seriously undermined predictability of business performance in the past. The London Metals Exchange (LME) had indicated their intention to launch new Futures contracts to provide a mechanism to manage this risk - and Innovene had identified it as a strategic imperative to support these contracts through active participation in the new market at an early stage.
How did Berkeley help?
Having supported Innovene in the definition of their commercial optimisation strategy (which included the above as a recommendation) Berkeley were asked to come back and perform a ‘health check’ on the progress of Innovene’s implementation project for the new LME futures contracts.
Working closely with the project team, Berkeley identified important gaps and issues and supported the project leader in building a clear and complete plan, along with a focused and well integrated team, to turn the project around.
Berkeley then went on to support Innovene in managing the remainder of the project through to a successful delivery, recovering 2 to 3 months of lost time in the process.
Where are they now?
Innovene was the first producer to actively trade the new contracts on the LME. In addition to being able to use the contracts to hedge its price risk, Innovene’s early involvement as a producer enabled it to play an important role in facilitating physical settlement of futures contracts.
Enabling an early market entry had a positive impact on market liquidity and price convergence - and proved to be a commercial success for Innovene, who estimated that the project had recovered its initial investment 4 times over during the first month of trading.