Futures

CRU U.S. Midwest HDG Coil Index to Be Used in Settlement of New CME Futures Contract

Written by Chris Houlden


CRU’s U.S. Midwest hot-dipped galvanized (HDG) coil base price index will be used in the settlement of the CME Group’s new cash-settled U.S. Midwest Domestic Steel Premium (CRU) Futures contract. As announced earlier today by CME Group, the contract will settle on the premium of CRU’s HDG coil base price over the established CRU U.S. Midwest HRC index and is due to launch on March 23, 2020.

Having served the market for over 30 years, CRU’s U.S. Midwest HDG coil base price adheres to exactly the same methodology as CRU’s recognized U.S. Midwest HRC price. It is based exclusively on transaction data, is volume-weighted, a balanced representation of buyers and sellers and is overseen by expert industry analysts based in Pittsburgh. CRU has a number of steel and other commodity specialists based here and elsewhere in North America.

Together with the existing CME HRC contract settled on CRU, the U.S. Midwest Domestic Steel Premium (CRU) Futures contract will complement the existing HRC contract to provide the downstream market with an additional price risk management tool. Crucially, it is based on the physical market’s most adopted prices.

“We are delighted to work with CME Group and extend our service to physical and paper markets, building on our established position in the flat-rolled market in North America. Market volatility has not gone away, and we are pleased to support additional risk management tools whilst providing the most trusted and reliable physical prices to the market,” said CRU Head of Prices Development Chris Houlden.  

“This new hedging tool for the downstream flat steel market is a welcome additional price risk management tool. It will allow for more precise hedging, benefiting the entire ferrous supply chain,” added Jeremy Flack, founder and CEO of Flack Global Metals.

“Our clients across the ferrous supply chain continue to look for tools to hedge price risk, including for hot-dipped galvanized steel,” said Young-Jin Chang, Global Head of Metals Products, CME Group. “We are pleased to provide the downstream market with a new way to price and manage their exposure to changes to hot-dipped galvanized steel, as we continue to expand our growing ferrous product suite.”

View more CRU steel prices here.

For questions, please get in touch

Latest in Futures

HR futures: Nucor’s price cut makes its mark on steel markets

When we were asked to provide some additional commentary to SMU about the futures markets for flat rolled, our only reluctance to contribute was rooted merely in the fact that SMU (1) already offers an excellent array of authors on this topic and (2) a concern regarding what new ground could be covered that hasn’t already been discussed to death on this issue. Thankfully, however, Nucor has offered up something we can describe, without hyperbole, as simply revolutionary for spot pricing in flat rolled - a development that we simply could not resist commenting on with respect to its probable impacts on the futures market.