// definition
Price floor
A contractual threshold for revenue protection
Short definition
A price threshold used as a reference in a protection mechanism. Under a revenue guarantee agreement, a contractual reference price below the threshold can trigger a top-up on defined eligible volumes. The agreement determines the products, averaging method, duration and payment conditions. This protection transfers part of the downside price risk to the guarantor.
risk atlas
Knowledge map
Intuition
The producer receives protection when the contractual reference falls; the guarantor covers the gap defined in the agreement.
Formula
Simplified top-up example: max(floor − reference, 0) × eligible volumeRelated analyses
Primary sources
- MP Materials / SEC, Price Protection Agreement, 9 July 2025Definitions and Article II: reference price, eligible volumes, duration and conditional upside sharing.