3 ms·

Any reason why an automobile manufacturer couldn't buy a steel futures contract to fix the price?

• NegativeK 3y ago
  That's effectively what they were doing with the bulk order, right? By just trading the overhead of the future with the overhead of derusting.
• bluGill 3y ago
  I don't work in that area, but I suspect that is done. Auto makers also have the ability to order months in advance so they can yet discounts because the steel makers know what orders they need to fill each week instead of a lot of overtime to fill a large order.
• hef19898 3y ago
  Thisbis done, of course. Risk with securing long-term prices so is that those prices might be higher than short term ones for the same future period. So usually, admittedly it is a while I did raw material procurement and aerospace is different, you use a combination of both. You can still get squeezed so either way. But that has close to nothing to do with JIT, JIT just concerns the delivery bit (over simplified of course).
• worik 3y ago
  Futures contracts are not free
  • refurb 3y ago
    Nobody said they were?