Hey WSO,
I'm keen to know more about the metals derivatives (swaps and futures) market. If anyone could please provide some colour on the below (as well as any additional information they deem relevant), it would be hugely appreciated!
How are desks partitioned? In energy markets, for example, you have: i) Heavy / fuel oils; ii) Middle distillates; iii) Lights (e.g. gasoline, naphtha). How do things compare in metals? I'm aware there are precious, ferrous, and non-ferrous markets - are these the only determinants of division?
How does liquidity differ across metals? Do, for instance, certain metals trade far more extensively on screen than they do in the OTC market? Also, how far down the curve does meaningful liquidity exist for different metals?
Are there differentials? In energy, the most basic differential is a "crack" - the difference in price between a refined product and crude (e.g. RBOB - Brent). There are also geographical differentials, such as an East/West (e.g. the difference in price between an eastern grade of product and a western grade of product). Are there similar structures in metals?
What is the futures equivalent risk of different metals swaps contracts? In other words, how - in terms of monthly exposure - does the given quantity of a monthly swap contract equate to futures contracts?
If any other questions come to mind, I'll be sure to add them here / ask in the comments. Additionally, if anyone has any recommendations for reading material (akin to "Oil 101") on the metals markets, please let me know!
Hi YoungDumbFullOfRum, any of these threads helpful:
If those topics were completely useless, don't blame me, blame my programmers...
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