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MW Busheling Fe scrap prices could increase if US steelmakers decrease their reliance on iron ore. US steel mills prefer more scrap in furnaces, according to S&P Global. The Russia-Ukraine conflict has upended supply chains, and steelmakers such as Nucor and Steel Dynamics have distanced themselves from Russian pig iron, according to Bloomberg. Pig iron is produced by smelting iron ore and is later produced into steel. Producing steel by recycling steel scrap requires less energy than via iron. The US imported 3.9 million mt of iron ore in 2021, according to USGS data. On average, approximately 4% of US iron ore imports come from Russia. |
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Consumers who are concerned about their MW Busheling Fe Scrap or HRC steel input costs should consider financial swaps or purchasing call options (for HRC). Please note there is no options market for MW Busheling Fe Scrap. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decline. Please contact AEGIS for specific strategies that fit your operations. (5/6/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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05/04/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 04/21/2022: Russian Metals Production and Related News: Most Recent Developments (AEGIS Reference) |
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| Important Headlines | ||
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5/4/2022: US steel market sentiment turns more neutral on prices: survey 5/4/2022: Beijing steps up COVID curbs as virus spreads in China 5/3/2022: Stock futures fall after big market reversal to start May 5/3/2022: Aluminium maker Hydro warns of rising costs after record Q1 profit |
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| Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program.
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