The Hedging Corner: Wary about hedging the cost of your resins? You’re in good company


Resins comprise roughly half the cost of manufacturing plastics products, so it's smart business to control resins costs. Hedging is and should be an integral part of commodity cost control, resins included.

What is a hedge? For resins buyers, it's an alternative transaction to the purchase of a resin that will be made at some time in the future. Hedges are usually, not always, financial and their primary purpose is to guard against price increases in the associated resin until an opportune time determined by the hedger or until the physical resin is purchased and priced.

Anyone can hedge; not everyone hedges wisely. Plastics processors, many of them new to hedging, are concerned about higher costs (and weak profit margins) but wary of hedging as a means to control costs....
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