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Protect the value of stock
If market prices fall while you hold copper, aluminium, steel or other metal inventory, the value of that stock may decline before it is sold. A suitable hedge may help offset some of that price exposure.
Hedge Metals
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Metal price risk management
Protect the margin.
Not just the metal.
Metal prices can move between the moment you buy scrap, process a shipment, hold inventory and complete a sale. Currency Hedger helps businesses assess their commodity and currency exposure and explore structured strategies to manage risks that can erode commercial margins.
For scrap merchants, recyclers, processors, manufacturers, fabricators and metal distributors.
Where metal margins are exposed
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Scrap inventoryMaterial bought today and sold later
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Fixed-price contractsInput costs can change before delivery
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International transactionsMetal prices and settlement currencies move
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Payment timingPurchases and sales settle at different times
A clear risk assessment starts with the metal, volume, pricing basis, currency and time between purchase and sale.
Protect gross marginsUnderstand how adverse market moves may affect profitability.
Plan cash flowImprove visibility around future costs and receipts.
Assess FX exposureConsider the currency used to settle each transaction.
Make informed decisionsAlign risk management with your commercial needs.
Why hedge metals?
Your profit can change after the deal looks profitable.
For a metals business, the purchase price is only one part of the equation. Inventory may be held for days or weeks, material may need processing or transport, and the market price or exchange rate may change before the transaction is complete.
Metal price volatility is a business risk — not just a market headline.
When your business owns physical metal or has agreed a future purchase or sale, market movements can affect stock values and the margin you expected to earn.
✓Identify exposure between purchasing, processing, delivery and sale.
✓Understand how commodity prices and currencies affect the same transaction.
✓Evaluate whether a structured hedge could support more predictable commercial planning.
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Manage the gap between buying and selling
Scrap merchants and recyclers often purchase material before its final resale price is known. The time spent collecting, grading, processing and selling material can leave margins exposed to market changes.
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Manage fixed-price commitments
Manufacturers and fabricators may agree a selling price before purchasing all their required inputs. If metal prices rise before procurement, the expected margin can narrow.
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Recognise the currency component
International metal prices are often referenced in US dollars. If your business operates in euros, pounds or another currency, exchange-rate movements may change the local-currency cost or value of a transaction.
Who should consider hedging?
Metal exposure runs through the entire supply chain.
Hedging is not only relevant to large producers. Any business whose costs, stock value or sales margins depend on metal prices may benefit from understanding its exposure.
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Scrap Metal Merchants
Assess the risk that scrap purchased at one price loses value before resale, especially when inventory volumes or holding periods increase.
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Metal Recyclers and Processors
Review exposure while collecting, sorting, grading, melting or processing material before the final sale price is realised.
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Manufacturers and Fabricators
Consider the impact of rising input prices when customer contracts fix product prices before raw materials are purchased.
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Distributors and Wholesalers
Evaluate inventory exposure, customer pricing commitments and the potential impact of market changes on margins.
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Metal Importers and Exporters
Assess the combined impact of commodity prices, settlement timing and exchange rates on international purchases and sales.
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Industrial Metal Buyers
Understand procurement-cost uncertainty when metals are an important input to engineering, construction or manufacturing projects.
Commodity and currency exposure
Two risks. One commercial transaction.
A business importing metal may face a change in the underlying commodity price and a change in the exchange rate before payment is made. These are separate exposures that should be assessed together.
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Metal Price Risk
The market price of the metal may rise or fall between the point at which a deal is priced and the point at which the material is bought, processed or sold.
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Foreign Exchange Risk
The currency used to pay a supplier or receive customer proceeds may change in value against your business's operating currency.
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A Joined-Up Risk Review
Map commodity and currency risks together to understand their combined effect on purchase costs, sales receipts and expected margins.
Know what is at risk before the market moves.
Start with your metal type, approximate volume, pricing terms, transaction currency and the time between purchase and sale. Discuss your circumstances with Currency Hedger to explore the next steps.
A structured approach
From physical exposure to a considered hedge strategy.
A hedge should relate to a real business exposure and be designed around your commercial requirements, rather than treated as a speculative position.
Identify
Map the metal, quantity, purchase or sale terms, currency and expected transaction timing.
Assess
Consider how different price and FX scenarios could affect stock value, costs, receipts and margins.
Structure
Explore suitable risk-management approaches for your exposure, time horizon and business objectives.
Review
Reassess the underlying commercial position as quantities, delivery dates or contract terms change.
Frequently asked questions
Metal hedging, explained.
Why should a scrap metal merchant consider hedging?
A merchant may buy material now and sell it later. If market prices fall during the holding period, resale value can decline. Hedging may help offset some price risk when a suitable instrument and matching exposure are available.
Does hedging guarantee a profit?
No. Hedging is intended to manage a defined risk, not guarantee profits. It involves costs and can introduce basis, timing, liquidity and margin risks. A hedge may not perfectly match the underlying physical transaction.
Can a business face both metal and currency risk?
Yes. A business buying metal priced in one currency but reporting in another may be exposed to both commodity-price movements and exchange-rate changes. Each component should be identified and assessed.
Does a business need to hedge its entire metal position?
Not necessarily. The appropriate level depends on the business's exposure, risk appetite, contracts, stock position and financial capacity. Any strategy should be tailored to the circumstances and reviewed appropriately.
Explore our services
Manage risk across more than metals.
Commodity and currency exposures often overlap. Explore other Currency Hedger services relevant to your business.
Make your metal exposure part of the plan.
Discuss your business model, physical metal exposure and settlement currencies to explore whether a structured risk-management approach may be appropriate.
Important information: This page is for general informational purposes only and does not constitute investment, financial, legal, accounting or tax advice, or a recommendation to enter into any specific transaction. Hedging can involve costs and risks, including basis, liquidity, margin and imperfect-correlation risk, and may not be suitable for every business. The availability and suitability of any instrument depend on the product, market, jurisdiction and the business's circumstances. A hedge does not guarantee a profit or eliminate all risk. Seek appropriate professional advice before entering into a hedging arrangement.