Price risk management for metals recyclers
Recyclers convert scrap and secondary materials into metal that competes with primary refined supply. The business lives on the spread between feedstock cost and output value.
The exposure profile of recyclers
Feedstock is bought against assays, payabilities and discounts; output prices off refined exchange benchmarks. The spread between scrap and exchange prices moves with availability, secondary-material demand and outright price levels, sometimes tracking the exchange, sometimes decoupling from it entirely.
Timing mismatches add another layer: collecting and processing feedstock while selling output on different dates and bases creates inventory exposure between the legs. A recycler's measurement has to expose both the outright exposure and the spread between feedstock and product, or the true margin stays invisible.
What this means for your price risk programme
- Identifying the distinct risk sources on the feedstock and output legs
- Modelling spread exposure on historic prices and market scenarios
- Measurement that exposes inefficiencies and their sources
- Reporting presented in both volumetric and financial terms
Services that fit this model
Related insight
Price Risk Perspectives Versus the Troublesome Truth.Are you a recycler facing metals price volatility? We always welcome the opportunity to talk.
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