Hedging is a financial instrument which is used to manage risk and minimise losses on investments. With low risks, profits also need to come down.
How can the steel industry (steel traders, steel producer, steel consumers etc.) benefit from hedging?
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Steel hedging is a strategy designed to minimise exposure to unwanted market risk.
Hedging allows a buyer/seller with price risk to transfer that risk to a person who wishes to take on that risk. The risk-taker may be a hedger who wants to take an opposite position, or, a speculator wants to take risks for profits.
Hedging for steel producers:
Hedging for a service centre, rolling mills and steel traders:
Hedging for steel consumers or end-users: