{"id":6343,"date":"2024-11-19T07:16:57","date_gmt":"2024-11-19T07:16:57","guid":{"rendered":"https:\/\/www.alcircle.com\/blog\/?p=6343"},"modified":"2024-11-19T07:21:55","modified_gmt":"2024-11-19T07:21:55","slug":"hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium","status":"publish","type":"post","link":"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium","title":{"rendered":"Hedging with Jorge #Episode9: Protecting against price risks in aluminium"},"content":{"rendered":"\n<p>This week, we\u2019re diving into hedging, a strategy used to protect against risks, <strong><a href=\"https:\/\/www.alcircle.com\/blog\/2024\/10\/24\/hedging-jorge-episode2-hedging-vs-speculation\/\">unlike speculation<\/a><\/strong>, which aims to profit from price movements. We will break it down with an example of an aluminium producer.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"youtube-embed\" data-video_id=\"X3Z_t84SS60\"><iframe loading=\"lazy\" title=\"Hedging with Jorge #Episode9: Protecting against price risks in aluminium\" width=\"696\" height=\"392\" src=\"https:\/\/www.youtube.com\/embed\/X3Z_t84SS60?feature=oembed&#038;enablejsapi=1\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p><strong>Speculation vs. Hedging<\/strong><\/p>\n\n\n\n<p><em>Speculation:<\/em> <strong><a href=\"https:\/\/www.alcircle.com\/blog\/2024\/10\/31\/hedging-jorge-episode4-speculators-guide-success\/\">A trader starts without a position<\/a><\/strong>, choosing to go long (buy) expecting prices to rise or short (sell) expecting prices to fall.<\/p>\n\n\n\n<p><em>Hedging: <\/em>Instead of predicting prices, hedging protects against risks like falling prices.<\/p>\n\n\n\n<p><strong>Aluminium producer\u2019s risk<\/strong><\/p>\n\n\n\n<p>An aluminium producer faces a major risk if market prices drop. Ideally, the producer could fix a sales price to avoid losses, but long-term price guarantees are rare due to market volatility.<\/p>\n\n\n\n<p><strong>What is volatility?<\/strong><\/p>\n\n\n\n<p>Volatility refers to price fluctuations around an average value. It can occur within:<\/p>\n\n\n\n<p><em>Stable markets:<\/em> Prices move up and down around a median price.<br><em>Trending markets: <\/em>Prices fluctuate within an upward or downward trend.<\/p>\n\n\n\n<p><strong>Why hedge?<\/strong><\/p>\n\n\n\n<p>For an aluminium producer, falling prices can threaten profitability, making it harder to cover production costs and overheads. <strong><a href=\"https:\/\/www.alcircle.com\/blog\/2024\/10\/22\/hedging-jorge-episode-1-protecting-aluminium-investments\/\">Hedging helps mitigate this risk<\/a><\/strong> by protecting against price declines.<\/p>\n\n\n\n<p>Stay tuned as we explore how hedging works in the aluminium market next time!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This week, we\u2019re diving into hedging, a strategy used to protect against risks, unlike speculation, which aims to profit from price movements. We will break it down with an example of an aluminium producer. Speculation vs. Hedging Speculation: A trader starts without a position, choosing to go long (buy) expecting prices to rise or short [&hellip;]<\/p>\n","protected":false},"author":89,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-6343","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-uncategorized"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Hedging with Jorge #Episode9: Protecting against price risks in aluminium - AL Circle Blog Hedging with Jorge #Episode9: Protecting against price risks in aluminium<\/title>\n<meta name=\"description\" content=\"An aluminium producer faces a major risk if market prices drop\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hedging with Jorge #Episode9: Protecting against price risks in aluminium - AL Circle Blog Hedging with Jorge #Episode9: Protecting against price risks in aluminium\" \/>\n<meta property=\"og:description\" content=\"An aluminium producer faces a major risk if market prices drop\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium\" \/>\n<meta property=\"og:site_name\" content=\"AL Circle Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AlCircle\" \/>\n<meta property=\"article:published_time\" content=\"2024-11-19T07:16:57+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-11-19T07:21:55+00:00\" \/>\n<meta name=\"author\" content=\"Jorge Eduardo Dyszel\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@alcircle\" \/>\n<meta name=\"twitter:site\" content=\"@alcircle\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Jorge Eduardo Dyszel\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium\"},\"author\":{\"name\":\"Jorge Eduardo Dyszel\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/#\\\/schema\\\/person\\\/64371a8562aa8589375f4f9a8c08a9f6\"},\"headline\":\"Hedging with Jorge #Episode9: Protecting against price risks in aluminium\",\"datePublished\":\"2024-11-19T07:16:57+00:00\",\"dateModified\":\"2024-11-19T07:21:55+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium\"},\"wordCount\":210,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/#organization\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium\",\"url\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode9-protecting-against-price-risks-in-aluminium\",\"name\":\"Hedging with Jorge #Episode9: Protecting against price risks in aluminium - 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