Petrochemicals firm - superior price forecasting in volatile commodity markets
Holistic view of short-term market perceptions dramatically improved the reliability of petrochemical price forecasting. PA applied its dynamic simulation insights to develop a robust commodity tool, Price Forecaster, with focus on the shifting perceptions of the big players in this commodity market, rather than on the fundamentals of the market itself.
The Price Forecaster quantitatively expressed strength and timing of the causal links between the factors that shape players' shifting short-term perceptions and resulting commodity price movements.
This holistic view of market perceptions has provided strong benefits:
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When applied to a particularly volatile commodity – where 40% of all month-to-month contract price changes exceed 7% in magnitude – PA's Price Forecaster substantially increased the reliability of the firm’s monthly price forecasting within less than 5% error rate
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For the first time, the client has a rigorous quantitative platform applicable across various markets, segments and departments for making, testing, discussing and communicating market views and commodity price forecasts
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It enables commodity experts to run reproducible scenario analyses that ensure learning across organisational boundaries.
Even on the narrowest of measures, the client's return on investment for the Price Forecaster is spectacularly high.
To find out how PA can ensure reliability in volatile market environments, please contact us now.
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