From Yahoo Finance: 2025-06-03 15:00:00

Metal buyers are turning to hedge fund strategies for base metals like copper and aluminum. Copper prices fluctuated between $4.55-$4.80 per pound in May, while aluminum is expected to average $2,574/tonne in 2025. Analysts predict a 6% increase in aluminum prices compared to 2024 due to expected supply deficits.

Base metal prices remain volatile due to emerging supply constraints and global demand amid trade tensions. Effective hedging is essential for stabilizing costs and providing price predictability for budgeting and planning purposes.

Hedging strategies include buying metal futures, using forward contracts, and utilizing options for price predictability. Options provide the right to transact at a set price, offering flexibility in managing price risks for metal buyers.

Other hedging techniques involve fixed-price swaps, long-term supply agreements, and structured notes to hedge budgets and lock in costs. Companies can also negotiate contract terms with suppliers to share risk and ensure price predictability for metal purchases.

Diversifying suppliers and regions, forming strategic partnerships, and employing robust risk management policies are crucial for effective hedging strategies in the face of global growth and trade uncertainties. Proactive hedging with a mix of strategies can help stabilize budgets and protect margins for metal buyers.

Read more: Navigating Base Metal Price Swings Through Strategic Hedging