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On a risk adjusted basis, no. You're buying the raw material assuming aluminum heat sinks will be .67/lb, only to discover that by the time you've liberated the
by rrggrr 8y ago
On a risk adjusted basis, no. You're buying the raw material assuming aluminum heat sinks will be .67/lb, only to discover that by the time you've liberated the Al from the stream the price has dropped to .40/lb. That just happened. Or, you've invested $30m - $100m in an Ontario e-scrap plant assuming the CADGOV won't reverse its e-scrap policy. Then it does essentially that and the market you thought you had has changed dramatically. That happened.
- 21 8y ago> assuming aluminum heat sinks will be .67/lb, only to discover that by the time you've liberated the Al from the stream the price has dropped to .40/lb Maybe you can use a financial hedging contract to lock in the price of alu?
- recycledmatt 8y agoTypically the volumes are relatively small, which makes it’s expensive to hedge. It’s a penny game. If you are making a 35% spread on your buy/sell the one time inventory depreciation will definitely hurt, but your spread and net pennies per pound has also gone down substantially as well.