Why hedge your commodity risk?

Many businesses are grappling with challenges arising from the surge in energy, metals and other commodity prices. Effectively passing on these heightened costs to customers through sales prices is often a practical challenge.

It's possible that your organisation is also facing continuously rising commodity prices, prompting you to consider strategies to safeguard your profit margins and competitive standing. Or, potentially you’re a commodity producer that have benefitted from an advantageous move in commodity prices, and want to lock in the price of a fraction of your production to secure future sales income?  

As volatility in commodity markets intensifies, companies are recognizing the need for better control over the commodity component of their cost or income structure. Unfortunately, various departments such as risk management, purchasing, leadership, and sales often operate independently, leading to an ad hoc approach and passive response to market trends.

Companies that have implemented an optimized and well-structured commodity risk management policy are better equipped to navigate price volatility effectively.

Key questions all companies should consider: 

• Have we thoroughly identified all our commodity exposures?
• Is there clear accountability for managing these risks?
• Is our business continuity secure amidst extreme price fluctuations? 

SEB can assist you by assessing and managing your commodity risk with the help of our experienced client team and deep industry knowledge. Feel free to reach out and discuss your situation without any obligation.