Unless the producers carried a speculative short in excess of their production, I don’t think it’s right to say they weren’t covered. They have the next x mont

Unless the producers carried a speculative short in excess of their production, I don’t think it’s right to say they weren’t covered. They have the next x months/years of production sold forward, and produce enough to fill those contacts over that period. However they have to post margin on the entire position at the current market price, which creates the liquidity crunch. If they ignored the margin requirements, they’d fill the contracts over time as planned, eat a paper loss on the price the they could have sold the metal at, and be a little bit sad. If the margin rules are enforced, they have to come up with a bunch of cash, or close the position