Hindustan Zinc Ltd., a unit of billionaire Anil Agarwal’s Vedanta Ltd., has broken with its usual practice and hedged about a quarter of its annual metals production as prices trade near their highest level in years.
The company has locked in prices for 220,000 metric tons of zinc and 30,000 tons of lead, it said in an earnings statement on Monday. Zinc, used to galvanize steel for the auto industry, climbed to the highest in a decade this month and lead has risen to the strongest level since 2011. The decision to hedge was taken even as the company expects prices to remain elevated.
“We normally never hedge, but the volatility in the zinc prices was so high in the recent quarter that we decided it may be a prudent strategy to hedge a part of our production,” Chief Executive Officer Sunil Duggal said on a conference call. Zinc shortages will persist in the next few quarters, keeping prices at $3,000 to $3,500 a ton, he said. The metal was at $3,163 on Tuesday.
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