AL Circle Blog

In this insightful episode of Hedging with Jorge, we explore a real-world example from the aluminium trade, an example that highlights the subtle yet powerful role of premiums and hedging strategies when prices rise. Jorge walks us through a familiar trading scenario: you’ve already purchased aluminium at $2,500 per tonne, inclusive of a physical market […]

In this blog of Hedging with Jorge, we move from exercises into action. Jorge walks us through a practical scenario faced by aluminium traders when they are holding physical inventory but want to manage price risks. No numbers this time, just pure conceptual clarity. Let’s assume you’re a trader who has purchased aluminium, paid for […]

In the 57th blog of Hedging with Jorge, we delve into a practical scenario that illustrates the complexities of aluminium trading, particularly focusing on premium arbitrage and the strategic use of futures hedging. Scenario overview: A trading company purchases 5,000 tonnes of aluminium at a fixed price of $2,500 per tonne, with an additional premium […]

In this episode of Hedging with Jorge, we dive into the practical application of short hedging in the futures market using a real-world aluminum scenario. Jorge walks us through how a physical sale, when paired with a futures market hedge, can protect against falling prices and secure a positive financial outcome. The Scenario: Physical purchase […]

Let’s break down the concept of hedging, especially in the context of aluminium trading, in a clear and simple way. Stepping into the shoes of a hedger: Imagine you’re someone who uses aluminium in your business. Naturally, you’d buy aluminium from your regular supplier. But what if your supplier can’t give you a fixed price […]

In this blog of Hedging with Jorge, we shift focus from speculation to a core principle of risk management – hedging. To be hedged means to be protected. While the concept is rooted in financial markets, its application starts much earlier, in our everyday lives. Let’s begin with a simple scenario: imagine the weather forecast […]

In this blog of Hedging with Jorge, we conclude our exploration of the third core function of the London Metal Exchange (LME): delivery. After diving into cash settlement and reversing futures positions, we now take a close look at what it means to physically deliver aluminium when you’re short on the futures market. The delivery […]

In this blog of Hedging with Jorge, we explore the third critical LME role delivery. Learn what happens when you opt for physical settlement instead of closing your futures contract. From broker interactions to warehousing costs, this 6-minute breakdown with Jorge and Ian unpacks it all. Watch now to understand how delivery premiums work and […]

In this blog of Hedging with Jorge, we step into the real-world journey of acquiring aluminium and the often-overlooked costs that come with taking delivery. From LME warrants to consolidation charges, Jorge breaks down the concept of the equivalent premium, a cost that begins accruing the moment you decide to bring the metal home. Suppose […]

In Jorge’s blog, we’re diving into the third crucial role of the London Metal Exchange (LME): delivery. If you’ve ever wondered what happens if you don’t close your futures position on time, this one’s for you. Let’s start with a simple scenario. Suppose you’ve taken a long position in the aluminium futures market, expecting prices […]