A derivative which has a metallurgical commodity as underlying asset. Unlike financial assets, metallurgical commodities are valued based on their future expected spot prices rather than future expected cash flows. For example, the value of a futures contract on copper is based mainly on expected future spot prices of copper and the storage costs of holding this commodity. Furthermore, seasonality affects commodity prices as there arises a mismatch between production by mining and consumption in an industrial process.
Some commodity derivatives can be classified as metallurgical derivatives.
