Standard Steel Trading to Offer Fixed Price Steel Contracts Based on Financial Derivatives
Steel Market Update has been advising service centers and other steel companies that they need to understand hedging strategies and how to use HR Futures to their advantage. At the very least they need to understand how the competition is going to make a run at your customers. We received the following announcement this evening from one company which is marrying the two - financial derivatives to actual steel delivery and pricing:
Atlanta, Georgia – March 8, 2012 - Standard Steel Trading Company, a Delaware corporation headquartered in Atlanta, announced today the acquisition of Birmingham Futures Incorporated.
Birmingham Futures was formed in 2003 by former steel executive and steel futures pioneer Jonathan C. Putman. It is a registered commodity futures broker and focuses on managing steel price risk through the use of steel futures and over-the-counter steel price swaps. In addition, it provides steel hedging workshops and consulting services for the implementation of steel hedging programs. Putman will serve as the President and CEO of both Standard Steel Trading Company and the Birmingham Futures Division.
Standard Steel Trading Company focuses on managing steel price risk by offering fixed price programs, max price programs, and consigned inventory at below market price. Standard Steel Trading Company accomplishes this by purchasing their client’s steel, produced to their client’s specifications, from their client’s existing mill sources. Standard Steel Trading Company utilizes highly effective financial hedges to mitigate price risk in these transactions. Putman pointed out, “Standard Steel Trading Company does not come between our clients and their mills. We simply do for them what they both want but are unable to do for themselves, we offer long term fixed price contracts.”
“When prices are expected to rise, the consigned inventory program enables clients to take advantage of special buying opportunities without tying up their cash.” Putman said, “Standard Steel Trading Company buys the steel, puts it on the client’s floor for them to use as they see fit, and invoices them monthly at a negotiated below market price. This insures locking in a spread even if prices fall.”
“This business combination is the ideal synergy”, said Putman, “combining the physical steel transactions on the trading side with financial transactions on the hedging side. It gives us the ability to offer steel users the best of both worlds and allows them to lock in their steel cost for long term projects.”
Steel Market Update is offering our next Hedging Price Risk workshop on April 11, 2012 in Chicago, IL. The workshop is a joint venture with Andre Marshall and his brokerage company Crunch Risk, LLC and the CME Group. The workshop will be held at the Chicago Board of Trade building and will include a tour of the CME trading floor. Our program is unique as we have brokers, representatives of the exchange (CME) and the steel community (John Packard of SMU) which provides an excellent learning environment. For information go to our website or contact us directly at: email@example.com