Alro uses two swap contracts to protect itself from aluminum price fluctuations

According to capital market legislation, swaps are privately negotiated transactions on the over-the-counter market, representing the equivalent of a series of forward contracts, by which the seller and buyer agree on the delivery of a specific quantity and quality of an asset (usually a good) at a future date.

As such, the JP Morgan Chase investment bank concluded a swap transaction worth an estimated $78.51 mln, by which it will acquire 25,011 tons of aluminum from Alro, at an average price of $3,139 per ton.

According to the communique issued Friday by the Bucharest Stock Exchange (BVB), payments will be made on the last day of every month, following the period in which the average price of the payment order will be set, to 30 January 2009. Alro has already concluded a swap transaction for 55,000 tons of aluminum, worth $170.75 million, with Credit Suisse. The Swiss bank estimated an average price of $3,104 per ton of aluminum. Payments for the transaction with Credit Suisse will be made on the first Monday of every month following the period in which the average price will be set, through February 2009.

The two transactions concluded on 10 April are mechanisms by which Alro will protect itself from the fluctuations of the price of aluminum. 

At the beginning of January, Alro SA also concluded two forward transactions with Deutsche Bank AG London on the leu/dollar exchange rate, worth a total of RON 131.3 mln, to cover itself against the risk of exchange rate fluctuations.

Last year, Alro Slatina had a net profit of RON 438.3 mln (€121.4 mln), up 15 percent compared to 2006, due to some 7 percent shrinkage of the company’s business, with turnover worth RON 2.05 bln (€566.54 mln). (NewsIn)