Managing FX Risk in the Metals and Recycling Sector
The metals and recycling sector has a truly global reach. With accelerating demand met by international supply, merchants can be significantly impacted by the volatile foreign exchange market and challenges linked to FX risk.
FX Risk Exposure
Increasing demand for metals amid the urbanisation and industrialisation of emerging and developing countries, coupled with a focus on resource conservation and reducing CO2 emissions, has driven market expansion.
1. Price Volatility
Operators within the industry often focus on the value of their commodity, causing them to overlook the importance of hedging FX exposure. This shortsighted approach fails to recognise the impact currency fluctuations can have on prices and, therefore, profits.
2. Global Supply Chain Complexity
As a tangible commodity, metals are imported and exported via complex global supply chains. Their movement across these intricate networks exposes their value to exchange rate volatility amid a need to make international payments. This inherent FX risk can distort product pricing, budgetary planning, and net cash flow management along supply chains – eroding value creation and financial stability.
Working as a strategic partner, Lumon augments FX risk management by combining market expertise, technical analysis, and a relationship-led service with industry experience. This multidisciplinary approach helps you make informed strategic decisions that control the cost of international trades in the face of fluctuating exchange rates.
1. Currency Risk Mitigation
Lumon’s precision FX strategies empower your metals and recycling enterprise to navigate volatile currency markets with confidence. These detailed plans mitigate currency risk, stabilise prices and protect profits by harnessing solutions that align with your requirements, exposures, pain points, and risk appetite.
Spot trading along with Limit Orders and Stop Losses can help you manage short-term volatility, while Flexible Forward Contracts, layered hedging and a blended trade management approach can protect against longer-term risks.
2. Streamlined Cross-Border Transactions
Our FX solutions ensure efficient cross-border payments, enabling you to focus on the core aspects of your metals and recycling operations. These streamlined processes are underpinned by a dedicated account manager who offers support and guidance on developing and executing a tailored FX strategy and keeps you abreast of market moves and opportunities.
Moreover, through our network of tier 1 banks, we can provide competitive pricing and efficient trade settlement.