When supply volatility hits the market, contracts that were signed in advance of the onset of the volatility tend to be lower in price than the spot market. That is because spot deals include a premium for risk mitigation by sellers, even as contracts continue to reflect a time before supply uncertainty. Of course as time passes, contracts end and new contracts are signed, including the new price increases.
These price increases often bring about an increase in demand volatility as companies finish their stocks and opt to buy smaller volumes in anticipation of a future price decrease. As demand. . .
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