Primary aluminium, billets and scrap are the basic raw materials used by the Group. Primary aluminium is mainly purchased on the basis of annual contracts and the price is determined on a monthly basis individually for each delivery. Prices of aluminium scrap purchased on the market are not based on the price formulas directly related to the aluminium quotations at the LME; however, there is a significant correlation of their prices with the metal quotations at the LME. The risk of changes in the prices of basic raw materials is mitigated by futures contracts for the purchase of aluminium, and properly created sales formulas. As regards the EPS, the risk of aluminium prices fluctuations is transferred to the customer through price formulas, or in case of fixed prices are hedged with term contracts. At the ASS, aluminium sales prices are mainly based on price lists, which means that the dominating form of risk limitation is the strategy of hedging with term contracts.
