Evaluating product exchange options in integrated steel mills
Autor(a) principal: | |
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Data de Publicação: | 2013 |
Outros Autores: | , , |
Tipo de documento: | Artigo |
Idioma: | eng por |
Título da fonte: | BBR. Brazilian Business Review (English edition. Online) |
Texto Completo: | http://www.bbronline.com.br/index.php/bbr/article/view/235 |
Resumo: | There are two basic ways to produce steel on a large scale: using iron ore and coal in blast furnaces or employing ferrous scrap in electric arc furnaces. The first requires a larger initial investment but is more competitive in terms of scale gains. The disadvantage is the need for uninterrupted operation, reducing the flexibility to adjust production. To mitigate this problem, it is common to invest in steel rolling assets, generating the possibility of diversifying production and valuable product exchange options. In this work, employing Monte Carlo simulation, we calculate the value of a product exchange option in a steel mill composed of a blast furnace with a hot roller. The results show that this option can generate a significant increase on the NPV of blast furnace steel making projects, and also reveals the importance of choosing the type of stochastic process for the steel in determining the option’s value. |
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BBR. Brazilian Business Review (English edition. Online) |
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Evaluating product exchange options in integrated steel millsAvaliação de opções de troca de produto em siderúrgicas integradasIntegrated steel millscapital budgetingMonte Carlo simulationproduct exchange optionsstochastic processesSiderúrgicas integradasorçamento de capitalsimulação de Monte Carloopções reais de troca de produtoprocessos estocásticosThere are two basic ways to produce steel on a large scale: using iron ore and coal in blast furnaces or employing ferrous scrap in electric arc furnaces. The first requires a larger initial investment but is more competitive in terms of scale gains. The disadvantage is the need for uninterrupted operation, reducing the flexibility to adjust production. To mitigate this problem, it is common to invest in steel rolling assets, generating the possibility of diversifying production and valuable product exchange options. In this work, employing Monte Carlo simulation, we calculate the value of a product exchange option in a steel mill composed of a blast furnace with a hot roller. The results show that this option can generate a significant increase on the NPV of blast furnace steel making projects, and also reveals the importance of choosing the type of stochastic process for the steel in determining the option’s value.Há duas formas básicas de se produzir aço em grande escala: utilizando-se matérias-primas (minério de ferro e carvão) por meio de produção em altosfornos; ou o emprego de sucata ferrosa em aciarias elétricas. A primeira exige investimento inicial maior, é mais competitiva em termos de custos e de ganhos de escala. A desvantagem é a necessidade de funcionamento praticamente ininterrupto, diminuindo a flexibilidade de ajuste da produção. Como forma de mitigar esse problema, é comum o investimento em ativos de laminação, gerando a possibilidade de diversificação da produção e valiosas opções de troca de produto. Neste trabalho, utilizando-se Simulação de Monte Carlo, foi calculado o valor de uma opção de troca de produto em uma siderúrgica composta de um alto-forno e de um laminador a quente. Os resultados mostram que essa opção pode gerar aumento significativo no VPL de projetos em siderúrgicas de alto-forno, revelando ainda a importância da escolha do tipo de processo estocástico do aço na determinação do valor da opção.FUCAPE Business Shool2013-01-01info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionPeer-reviewed ArticleArtigo revisado pelos paresapplication/pdfapplication/pdfhttp://www.bbronline.com.br/index.php/bbr/article/view/23510.15728/bbr.2013.10.1.5Brazilian Business Review; Vol. 10 No. 1 (2013): January to March 2013; 102-126Brazilian Business Review; v. 10 n. 1 (2013): Janeiro a Março de 2013; 102-1261808-23861807-734Xreponame:BBR. Brazilian Business Review (English edition. Online)instname:Fucape Business School (FBS)instacron:FBSengporhttp://www.bbronline.com.br/index.php/bbr/article/view/235/355http://www.bbronline.com.br/index.php/bbr/article/view/235/356Ozorio, Luiz de MagalhãesPinto, Carlos de Lamare BastianBaidya, Tara Keshar NandaBrandão, Luiz Eduardo Teixeirainfo:eu-repo/semantics/openAccess2018-11-06T19:54:02Zoai:ojs.pkp.sfu.ca:article/235Revistahttps://www.bbronline.com.br/index.php/bbr/indexONGhttp://www.bbronline.com.br/index.php/bbr/oai|| bbronline@bbronline.com.br1808-23861808-2386opendoar:2018-11-06T19:54:02BBR. Brazilian Business Review (English edition. Online) - Fucape Business School (FBS)false |
dc.title.none.fl_str_mv |
Evaluating product exchange options in integrated steel mills Avaliação de opções de troca de produto em siderúrgicas integradas |
title |
Evaluating product exchange options in integrated steel mills |
spellingShingle |
Evaluating product exchange options in integrated steel mills Ozorio, Luiz de Magalhães Integrated steel mills capital budgeting Monte Carlo simulation product exchange options stochastic processes Siderúrgicas integradas orçamento de capital simulação de Monte Carlo opções reais de troca de produto processos estocásticos |
title_short |
Evaluating product exchange options in integrated steel mills |
title_full |
Evaluating product exchange options in integrated steel mills |
title_fullStr |
Evaluating product exchange options in integrated steel mills |
title_full_unstemmed |
Evaluating product exchange options in integrated steel mills |
title_sort |
Evaluating product exchange options in integrated steel mills |
author |
Ozorio, Luiz de Magalhães |
author_facet |
Ozorio, Luiz de Magalhães Pinto, Carlos de Lamare Bastian Baidya, Tara Keshar Nanda Brandão, Luiz Eduardo Teixeira |
author_role |
author |
author2 |
Pinto, Carlos de Lamare Bastian Baidya, Tara Keshar Nanda Brandão, Luiz Eduardo Teixeira |
author2_role |
author author author |
dc.contributor.author.fl_str_mv |
Ozorio, Luiz de Magalhães Pinto, Carlos de Lamare Bastian Baidya, Tara Keshar Nanda Brandão, Luiz Eduardo Teixeira |
dc.subject.por.fl_str_mv |
Integrated steel mills capital budgeting Monte Carlo simulation product exchange options stochastic processes Siderúrgicas integradas orçamento de capital simulação de Monte Carlo opções reais de troca de produto processos estocásticos |
topic |
Integrated steel mills capital budgeting Monte Carlo simulation product exchange options stochastic processes Siderúrgicas integradas orçamento de capital simulação de Monte Carlo opções reais de troca de produto processos estocásticos |
description |
There are two basic ways to produce steel on a large scale: using iron ore and coal in blast furnaces or employing ferrous scrap in electric arc furnaces. The first requires a larger initial investment but is more competitive in terms of scale gains. The disadvantage is the need for uninterrupted operation, reducing the flexibility to adjust production. To mitigate this problem, it is common to invest in steel rolling assets, generating the possibility of diversifying production and valuable product exchange options. In this work, employing Monte Carlo simulation, we calculate the value of a product exchange option in a steel mill composed of a blast furnace with a hot roller. The results show that this option can generate a significant increase on the NPV of blast furnace steel making projects, and also reveals the importance of choosing the type of stochastic process for the steel in determining the option’s value. |
publishDate |
2013 |
dc.date.none.fl_str_mv |
2013-01-01 |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion Peer-reviewed Article Artigo revisado pelos pares |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://www.bbronline.com.br/index.php/bbr/article/view/235 10.15728/bbr.2013.10.1.5 |
url |
http://www.bbronline.com.br/index.php/bbr/article/view/235 |
identifier_str_mv |
10.15728/bbr.2013.10.1.5 |
dc.language.iso.fl_str_mv |
eng por |
language |
eng por |
dc.relation.none.fl_str_mv |
http://www.bbronline.com.br/index.php/bbr/article/view/235/355 http://www.bbronline.com.br/index.php/bbr/article/view/235/356 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf application/pdf |
dc.publisher.none.fl_str_mv |
FUCAPE Business Shool |
publisher.none.fl_str_mv |
FUCAPE Business Shool |
dc.source.none.fl_str_mv |
Brazilian Business Review; Vol. 10 No. 1 (2013): January to March 2013; 102-126 Brazilian Business Review; v. 10 n. 1 (2013): Janeiro a Março de 2013; 102-126 1808-2386 1807-734X reponame:BBR. Brazilian Business Review (English edition. Online) instname:Fucape Business School (FBS) instacron:FBS |
instname_str |
Fucape Business School (FBS) |
instacron_str |
FBS |
institution |
FBS |
reponame_str |
BBR. Brazilian Business Review (English edition. Online) |
collection |
BBR. Brazilian Business Review (English edition. Online) |
repository.name.fl_str_mv |
BBR. Brazilian Business Review (English edition. Online) - Fucape Business School (FBS) |
repository.mail.fl_str_mv |
|| bbronline@bbronline.com.br |
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1754732237877673984 |