CME Group Virtual Steel Mill & Hot Rolled Futures
Steel Market Update recognized a couple of years ago the potential value of the HR Futures markets as a way for steel companies to control price volatility within the flat rolled steel markets. We also looked at the Futures markets as a potential sales tool for steel mills and steel service centers who are working with manufacturing companies insisting on long-term firm pricing for their various steel contracts.
In July 2010 the Steel Market Update newsletter began producing weekly articles about the Hot Rolled Futures markets, the number of transactions being made on a weekly basis and pricing trends (including the CME Group HRC Forward Curve). We also publish this information on our website: www.steelmarketupdate.com at least once per week.
We have seen a sharp increase in interest within the flat rolled steel community and we have had a number of steel mills, trading companies, manufacturers and steel service centers participating in our Hedging Price Risk workshops. Steel Market Update has partnered with the CME Group and with Crunch Risk, LLC in order to provide a well-balanced approach to the process of educating those within the industry about both the CME Group HRC Futures as well as OTC Swaps and other hedging strategies which can be utilized by those actively involved in the steel industry.
The steel industry is going to hear new terminology out of the financial community. The CME Group has begun a program called the “Virtual Steel Mill” which may have mixed connotations to those actively involved in the buying and selling of steel. What the CME Group has done is to provide a detailed, comprehensive derivatives program for the ferrous industry.
Their comprehensive approach includes iron ore contracts, Hot Rolled Coil Futures, Hot Rolled Coil Options and other financial instruments which can be used to hedge price risk and/or lock in margins and smooth cash flows when needed.
Steel Market Update will continue to offer workshops around the country – many times at CME facilities in Chicago and New York City – throughout the year. Andre Marshall, CEO of Crunch Risk, LLC and the CME Group representatives will work with Steel Market Update to help the industry understand the CME Virtual Steel Mill and the various hedging strategies used by the steel industry in order to control volatility.
Our next two Hedging Price Risk workshops will be held on January 25, 2012 in Houston, Texas to be followed by April 11, 2012 at the Chicago Board of Trade Building (a CME Group facility) in downtown Chicago. You can learn more about the programs on the Steel Market Update website (www.steelmarketupdate.com/events) or by contacting Steel Market Update offices at 706-216-5440 or by email at email@example.com.