What is steel hedging ?
Hedging of steel products allows the customer to offset the risk of price fluctuations in the physical market. This is achieved by securing a fixed price for the commodity in the steel futures market.
While the customer manages their production, or budget for a construction project, the period of the project may extend over 3, 6 or 12 months. Generally, steel mills work 1 or 2 months forward, a mills selling prices reflect the cost of the raw materials for the next month of production.
Therefore, customers have the option today of purchasing for stock, which creates a large burden on the capital, or using the steel future market for hedging their purchase.
SteelScope offers further insight into the risks associated with steel futures and how to correctly manage them. This includes Buyer risk, Timing risk, Forex risk, among others. We give clear projections of the profit and loss, descriptions of the risks and the mechanics of the hedging process so that it may be forecast and understood from a commercial and financial perspective.