Get the latest hot-rolled coil derivatives price information on the CME NYMEX exchange
Steel price risk management
Risk management solutions for today’s world
Risk management tools allow steel processors large and small to deliver fixed prices to their customers without taking margin risk. In addition, companies who must hold inventory are often exposed to significant losses if the market falls; the proper use of risk management tools allows you to “de-risk” your exposure in either scenario.
Cargill Steel can provide you with both the information you need to make an informed decision about these risk-mitigating products, as well as provide the products themselves in conjunction with Cargill Risk Management. To learn more about Cargill's risk management experience and how it can help your business be more successful, contact us online today or find the location nearest to you.
How to use financial tools to manage risk
Financial tools, when used correctly and in conjunction with physical delivery, can provide increased opportunities to reduce risk and lock in profits.
- Lock in profits: Financial tools allow the consumer to lock in their future cost of steel ensuring them that when the produce their product 6-12 months later they will know their cost ensuring a margin.
- Manage price risk: Because of the increase in steel price volatility, companies that hold 2-3 months of inventory are exposed to significant losses in a rapidly falling market. The proper use of risk management products would allow these consumers the ability to "de-risk" their exposure to heavy losses by entering into futures sales contracts.
What are derivatives?
Derivatives are a common risk management product. A derivative is a buy/sell contract whose value is derived from the value of the underlying asset.
How do NYMEX contracts work?
Sellers and buyers enter into derivatives contracts at a price that is based on the underlying price of the asset. Again, the contract price is derived from the value of the underlying asset, but it does not include any physical ownership of the asset.
Manufacturing and lead time risk: How to hedge
Because there is now a paper market for hot-rolled coil, the cost of a finished product can be locked in to insure an acceptable and stable margin on future delivered products.
Reduce risk through hedging
Hedging is removing exposure or risk by offsetting it with something of the opposite risk.
U.S. Midwest domestic HRC steel contract specifications
Venue: CME Globex, CME ClearPort
Trading Hours (Eastern): CME Globex: Sunday - Friday 6:00pm - 5:15pm with a 45-minute break each day beginning at 5:15pm
Contract type: Futures contract
Contract Size: 20 short tons
Underlying Currency: U.S. dollars
Minimum Price Quotation: $1.00 per short ton
Trading Months: 24 consecutive trading months
Settlement Type: Financial
Final Settlement: The average of the prices reported by CRU Indices during the contract month for the reference index
Last Trading Day: Last business day prior to last Wednesday of the month
Daily Settlement Price: Exchange compilation of broker prices and CME Globex
Margins: Margins are required for open futures positions
Cargill is your partner of choice in managing risk
With more than 150 years of commodity experience, Cargill is your reliable, trusted partner for risk management solutions. As one of the world’s largest privately held companies, we’ve demonstrated proven risk management across commodities, industries and geographies for over 20 years.
By collaborating with producers, consumers, merchants and investors of commodities in 55 global commodity markets, we can help you navigate metals market volatility and mitigate price risk.
Contact Cargill Steel today to learn more about how we can help your business thrive.
U.S. Steel Fact Sheet
View this fact sheet to learn more about how Cargill Steel can provide you with supply and pricing that turn complexities into market advantages.