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Zonal Spread

Price differential between two defined geographic market areas for the same commodity.

Zonal spread measures the price difference of a commodity between two regions, often used to evaluate transportation costs, market inefficiencies, or arbitrage opportunities.

For example, if natural gas trades at $3 in Region A and $3.50 in Region B, the zonal spread is $0.50. Traders use it to assess profitability and plan logistics.

Zonal spreads reflect market imbalances, transportation constraints, and regional demand variations. Understanding them is essential for risk management, trading strategies, and operational planning.

Traders, analysts, and logistics managers use zonal spreads to optimize trades, manage costs, and exploit regional price differentials in commodity markets.

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