“Steel futures should be good for everyone, whether seeking to improve forward planning or to protect operating margins. For example, steel producers should be empowered to make capital investment decisions based on more predictable cash flows, while steel users should have the ability to hedge their exposure to rising steel prices during protracted projects.”
Jean-Luc Fiorenzoni, Head of Steel Price Risk Management, Stemcor Source: Metal Bulletin
Members of the steel industry can benefit from managing price risk on the the LME to acheive a variety of outcomes:
Access a transparent reference price for use in negiotiations
Provide additional services to customers to gain a competitive edge
Protect physical stock against a fall in price
Swap physical material on a location and brand basis
Hedge physical purchases in times of production difficulty
Access the Exchange’s delivery mechanism as a source of material in times of extreme shortage, and as a channel to sell in times of surplus
The presence of a futures market for steel offers a number of benefits to those at all stages of the supply chain. Find out how each of the participants in the supply chain can benefit:
