Hot Rolled Futures: Past, Present, Future

SMU contributor Tim Stevenson is a partner at Metal Edge Partners, a firm engaged in Risk Management and Strategic Advisory. In this role, he and his firm design and execute risk management strategies for clients along with providing process and analytical support. In Tim’s previous role, he was a Director at Cargill Risk Management, and prior to that led the derivative trading efforts within the North American Cargill Metals business. You can learn more about Metal Edge at www.metaledgepartners.com. Tim can be reached at Tim@metaledgepartners.com for queries/comments/questions.

Does it make sense to say – “If you can make it through this year, then you can make it through anything”? It depends on your positioning. If you were a steel buyer this year, you’ve had to deal with unprecedented challenges – unless you had hedged yourself in late 2020 for the year or had a fixed price supplier deal that covered you. In addition, you probably had to worry about delivery issues and the myriad of supply-chain problems that the economy experienced over the past 12 months. Even if you had hedged yourself in late 2020, you are now faced with hedging your steel buy at much higher levels this year. The chart below shows the three-month forward HRC contract over the past two years.