Physical metal pricing risk is created by the commercial terms of the trade—not by the hedge itself.
Once material, quantity, benchmark, quotation period, currency and settlement terms are agreed, a transaction can carry market exposure even before the final price is known.
A benchmark hedge may reduce exposure to the reference metal price without eliminating grade, recovery, location, freight, premium or timing differences. Those physical components must remain visible in the commercial analysis.
Commodity invoices, operating costs and settlement cash flows may sit in different currencies and on different dates. FX exposure should therefore be assessed alongside the metal exposure.
Shipment changes, quantity tolerances and settlement timing can alter the exposure. Financial hedges may also create funding or collateral requirements before the physical transaction completes.
The purpose of hedging is not to forecast the market. It is to improve the controllability of a documented physical exposure while keeping residual risks visible.