Deutsche Bank says gas hedges delay impact of higher wholesale prices on businesses
DB•Deutsche Bank says elevated wholesale gas prices will raise business costs as fixed-price contracts renew and cheaper hedged purchases are replaced.
1. Hedges delay cost increases
Businesses with fixed-price contracts may see elevated wholesale gas prices feed into costs as contracts renew and cheaper hedged purchases are replaced. Procurement costs across hedging strategies could converge if gas prices remain at current levels, while spot-market buyers face increases first but benefit sooner from price declines.
2. Supply and energy risks
Germany’s purchases of Long-Term-Options could reduce supply risks and extreme price spikes, though stockpiling incentives could lift near-term demand. Businesses should regularly assess ways to reduce technical dependence on energy sources vulnerable to price swings.
