Price risk hedging for corporate clients
Price risk hedging with BlueOrange Bank
BlueOrange provides services for corporate clients in hedging their risks. Every business is associated with risks, including risks of price change. Proper risk management gives an advantage to a company in better planning their cash flow, contribute to business model sustainability in a longer term and allows minimizing company dependence on the ever-changing market conditions.
Over the course of many years, BlueOrange has been successfully partnering with companies from a variety of industries, where negative fluctuations of the market price on the products company trades or the raw materials they use, impact company operational model.
Typical industries and companies, whose activities are associated with price risks, are:
- petrochemical traders;
- metal traders;
- agricultural traders;
- manufacturers with a high share of export products to third countries, where sales are carried out in foreign currency;
- import merchants who purchase raw materials or products paying in foreign currency;
- ship owners and logistics companies whose business depends on the level of freight rates for various types of cargo ships.
Any manufacturer is interested in prices for their products to be stable and tend to grow. Any wholesaler is interested in buying and reselling their products at a higher price. However, how to protect yourself from the risk that prices may fall and the produced or purchased goods will have to be sold at a loss?
For all the above categories of clients, BlueOrange is ready to offer its solution and help in developing a strategy to minimize price risks, thereby reducing the dependence of the business model on the global environment, maintaining the level of margins and helping the management of a company to focus on their core activities - working with suppliers and customers, manufacturing, etc.
Financial market instruments, primarily derivatives, make it possible to neutralize partially or even completely the negative impact of price changes on the company's business.
How do hedging instruments work?
The main objective of price risk hedging is to compensate for lost profits or losses associated with trading in physical raw materials or commodities. The main difference between hedging and other types of transactions is that purpose of hedging is not to generate additional profit, but to reduce the risk of potential losses.
BlueOrange provides the ability to trade derivatives in order to hedge price risks for various types of commodities and raw materials:
|Company type||Commodities and|
|Crude oil, diesel fuel,|
heating oil, gasoline,
other oil products
|ICE, CME, NYMEX|
agricultural product traders
rapeseed oil, wheat, corn, etc.
|Futures||EURONEXT, LIFFE, CBOT|
|Shipping and logistics|
|Freight rates for Panamax,|
Supramax, Capsize ships
|Gold, silver, platinum,|
aluminum, copper, zinc,
nickel, lead, tin
|LME, COMEX, OTC market|
|Exporters and importers||Foreign currency.|
More than 50 currency pairs
|Futures, foreign currency|
contracts (FX, forward, swap)
BlueOrange provides access to modern trading platforms that allow you to track real-time prices for raw materials or currencies in the global financial markets, manage open positions and conduct transactions directly on the exchange in a most convenient way.
BlueOrange specialists have extensive experience in hedging various risks in the financial markets and are ready to help you develop a hedging strategy suitable for your business model.
Additional opportunities - Business financing
In any area of business, a stable financial partner is of high importance. Along with risk hedging services, BlueOrange is ready to offer business financing services. Obtaining a bank financing makes it possible to increase the volume of business, expand into new markets, expand the range of products or services offered, take the advantage of the favorable market conditions and quickly conduct a profitable deal. In many cases, hedging facilitates the attraction of credit resources, as it reduces the risk of losses in the event of negative price changes in the market.
Please refer to the Brokerage division specialists or your Сlient Relationship manager for more detailed information on any issues of hedging price risks and financing services.
Phone: +371 67034222