Entries for January 2013

It should come as no surprise that the commodity industry is predicting a continuation of 2012’s market volatility and slow economic growth for the balance of 2013.  Regional economies that were thought to be in recovery are now slipping back into recession. Major commodity price fluctuations are expected to persist, and global demand for oil is expected to rise only 0.8% to 90.4 million barrels per day this year.  Volatility will continue to be influenced by the euro-zone debt crisis, fluctuating demand in Asia, and continued political unrest in the Middle East. 

Commodity-consuming companies are challenged to respond to this volatility with supply chain strategies that drive top line performance while protecting the bottom line.  A strong pricing risk management strategy is essential to remain competitive.  However, it is not the only strategy that must be considered. The profitability advantages gained from insightful commodity purchasing and trading decisions can be obliterated by a poor volume management strategy that quickly erodes margins by causing costly mistakes such as expedited shipments, lost orders, missed sales opportunities, poor inventory staging, stock-outs and overruns.   

Global volatility only adds to the planning challenge. The importance of maintaining an accurate volume demand forecast, production schedule, distribution schedule, and inventory management strategy should not be lost on anyone.  

Triple Point’s Supply Chain Optimization (SCO) solutions help you address your risk mitigation strategy from a volume point of view.  Triple Point SCO integrates your data silos into a single planning database, allowing everyone to collaborate on one set of numbers to arrive at a highly accurate volume demand plan.  This plan then drives more efficient downstream production planning and scheduling decisions which translates to higher utilization, higher service levels and reduced inventory costs.  Learn more.

The energy industry and its associated supply chains are fast-changing and very complex. Just a few years back, several companies built LNG import terminals to meet the energy needs of the U.S. 

According to a NY Times articlethe billion-dollar terminals were obsolete even before the concrete was dry as an unexpected drilling boom in new shale fields from Pennsylvania to Texas produced a glut of cheap domestic natural gas. Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly triple the American price.”

Currently there are 25 LNG-importing countries in Europe, Asia, South America, Central America, North America and the Middle East, up from 17 importing countries in 2007. 

Cheniere’s Sabine Pass LNG Terminal in Louisiana was the first to receive approval to export LNG. According to Steven Chu, the U.S. Energy Secretary, "Our long term economic strength depends on safely and responsibly harnessing America's domestic energy resources while developing new and innovative clean energy technologies.  This project reflects a broad, 'all of the above' approach that will put Americans to work producing the energy the world needs."

The open question is whether this a good investment, or is the market changing so rapidly that the investment in LNG export terminals will also be obsolete before the terminals are fully functional? The same NY Times article mentions, “countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or LNG — could easily taper off by the time the new export terminals really get going, some energy specialists say.”

Whether it’s Crude, LNG, Natural Gas, Power, Biofuels or other energy commodities, the common denominator is volatility and complex supply chains. The combination of volatility and complexity is the reason Triple Point’s ETRM (energy trading and risk management) software has been in great demand over the last five years.  Energy companies that have not invested in sophisticated ETRM software have put their businesses at a competitive disadvantage.

Oil Trading SolutionThe gas in our cars, cleaning chemicals in our cabinets, and reusable cups from which we drink our coffee or tea all have ties to the crude oil industry. As feedstock for a wide array of goods, crude oil and crude products are among the most widely traded commodities in the world. The market attracts diverse participants; however, many of the challenges faced are universal.

CommodityPoint’s latest white paper, “Global Oil Markets- Increasing Uncertainty and Risk,” highlights several of these challenges and concludes that now is the time to invest in an advanced energy trading and risk management (ETRM) software solution to combat rising volatility.

This white paper discusses how the political unrest affecting many of the world’s crude-producing regions is having a direct effect on oil supply. Tensions in the Middle East threaten to shut down the busiest port in the region, which could interrupt the delivery of 17MMbbl/day. Should this situation come to fruition, market volatility will be further exacerbated, and those companies that are not properly equipped to manage it will suffer.

While the threat of a continued reduction in crude supply looms, crude demand continues to grow each year. CommodityPoint’s paper suggests the only way to effectively navigate the market fluctuations caused by scenarios such as this is to implement a sophisticated trading solution that can not only capture, manage, and value trades and hedge positions; but that can also model the entirety of the physical operations of market positions. Read the paper now and find out why it’s imperative to have an ETRM solution such as Commodity XL™ that provides an integrated, real-time view of physical and financial exposure alongside operational, credit and regulatory risk exposure.

Download the CommodityPoint white paper

WAM Supply Chain SolutionsI’m excited to share the news that Triple Point has acquired WAM Systems, the premier provider of supply chain planning and optimization solutions for the process industry.

WAM has an impressive presence in the chemical industry, and its solutions are also beginning to see adoption within other process industry segments including oil and gas, pharmaceuticals, CPG, and food and beverage. WAM’s worldwide customer base includes leading companies such as PTT Global Chemical, Saudi Aramco, Celanese Chemicals, LyondellBasell, Honam Petrochemical, Indian Oil, PetroChina, Sasol Oil, and Solvay.

Like Triple Point’s previous acquisitions, the WAM acquisition furthers Triple Point’s commitment to having the most comprehensive, advanced solutions for handling all the financial and physical aspects of Commodity Management. Softmar was acquired for its superior chartering and vessel operations solution, and QMASTOR for its exceptional coal and mineral supply chain solutions. Acquiring WAM – the premier provider of process industry supply chain solutions – made perfect sense as a next step.

The process industry is facing many challenges including extreme raw material price volatility and increasingly complex global supply chains. This business environment mandates that process manufacturing companies leverage advanced technology solutions to ensure efficient and profitable operations. With the acquisition of WAM, Triple Point now offers the only Commodity Management solution that optimizes all the physical and financial supply chain complexities that process manufacturing companies deal with on a daily basis.

Read the press release

Events

Procemin 10th International Mineral Processing Conference

October 15-18, 2013 | Chile

XXV Brazilian National Meeting of Mineral Treatment and Extractive Metallurgy (ENTMME)

October 20-24, 2013 | Brazil



Opinions expressed on this blog are those of its individual contributors, and do not necessarily reflect the views of Triple Point Technology, Inc.