A volatile scenario
Since 1991, 40lb. No.5 stock prices rose and fell an average of eight times a year, varying between two and 13 percent with each fluctuation. It seemed impossible to predict these variances; we were simply at the mercy of the market. Now, there's a solution to the seemingly insurmountable problem having to be reactive, rather than proactive, in the face of market changes. Financial risk management strategies—also known as hedges—take a lot of the guesswork out of managing pulp and paper prices. While these strategies don't help paper makers and consumers predict price variances, they do neutralize the risk of price volatility. They are flexible, easily tailored to each customer's needs, and outline the agreement duration, how much product it covers and how large a price swing will kick the agreement into effect.
- People:
- Coaster