Steel Products
Steel Hedging 101 Workshop: How to Protect Against Market Risk
Written by John Packard
March 26, 2021
Would you like to learn how to protect your business and minimize risk associated with unfavorable price changes, by figuring out what exactly is meant by “hedging a position”?
Steel Market Update can help to demystify hedging so you can quickly gain a concrete understanding of hedging basics. You will also learn about terminology, market structure, and how different risk strategies work for the flat rolled steel market.
The Steel Hedging 101: Introduction to Managing Price Risk Workshop will be run virtually on March 30-31.
This workshop will help you to understand:
- What “hedging” is and why so many companies do it
- What makes hedging in steel different versus other commodities
- The structure of the market and the mechanics of how trades are executed
- The costs and risk involved
Led by our hedging and metals expert, Spencer Johnson of StoneX, this workshop will benefit anyone who is looking for a concise introductory or refresher course.
You can attend the Steel Hedging 101 Workshop for just $1,250 per person. Don’t forget, SMU/CRU subscribers can save $100 plus an additional $100 per person for companies who register two or more people for the same workshop
About the event Schedule Instructors Delegates Register Book now
Agenda at a glance:
Introductory Hedge Concepts
- Why Hedge?
- Hedge Practices
- Facilities Futures/OTC Markets
- Understanding Risk
Structure of Trading
- Margin
- Clearing
- Settlements
Structure of Trading Terminology
(Language/Definitions of Futures Trading Concepts)
- Forward Curves and Current Markets
- Backwardation vs. Contango Markets
CRU to Speak on HRC Index
- CRU’s methodology
- How people use CRU U.S. Midwest Hot-rolled Coil Index
CME – What are futures and how does the exchange work
Futures / Swap Hedge Strategies
- Life of the Hedge from conception to completion
- Step One – Financing the trade
- Step Two – executing the trade
- Step Three – clearing the trade
- Step Four – settling the trade
- Ongoing Step – adjusting for basis risk
Practical Hedge Examples
- Vanilla Inventory Hedge
- Arranging a Fixed Price Sale
- Hedging a Forward Purchase
- Spread Trading
- Arbitrage
Next Steps
- Examples
- Opening an Account
- Costs to Trade
- Selecting a Broker, Bank, Etc.
John Packard
Read more from John PackardLatest in Steel Products
Active rig counts slipped in US, Canada
Drilling activity slowed in the US and Canada last week, according to the latest oil and gas rig count data released by Baker Hughes.
OCTG producers in Canada take aim at Mexico, US, others
Evraz NA and Welded Tube of Canada have lodged an unfair trade complaint against imports of OCTG, including those from USMCA trading partners Mexico and the US.
Final Thoughts
The difference: The spat with Turkey was a big deal for steel. This time, the 50% reciprocal tariff for Brazil – if it goes into effect as threatened on Aug.1 – hits everything from coffee and to pig iron. It seems almost custom-built to inflict as much pain as possible on Brazil.
CRU: US rebar and wire rod prices rise alongside S232 increase
CRU Senior Steel Analyst Alexandra Anderson discusses current market and pricing dynamics for long steel products in the US.
CRU: Excessive global supply could hit rebar mill investments in US
Following the onset of the war in Ukraine in March 2022, concerns about import availability and expectations of rising demand from President Biden’s Infrastructure Bill pushed US rebar prices to record highs. In response, a flurry of new mills and capacity expansions were announced to meet the rise in demand from growth in the construction […]