August 23, 2022

**AEGIS is attending the SMU Steel Summit Conference 2022 at the Georgia International Conference Center in College Park on August 22 – 24. If you would like to schedule a meeting during the summit, please contact Patrick McCrann at pmccrann@aegis-hedging.com or (713) 936-2806. **

Zinc, which is a key component in HDG production, has been subject to a nearly 22% price increase since mid-July due to European smelter curtailments. Normally, rising zinc prices would be bullish to HDG prices, but HDG producers likely can't pass along the cost due to lower buyer appetite amid slumping demand, according to Argus. They also believe that rising zinc prices could squeeze margins and lead to production curtailments, as the market is unlikely to accept higher HDG prices while demand is falling.

A slumping automotive sector and jitters over the global economy have pressured hot-dipped galvanized (HDG) coil demand and prices in recent months. Argus’s last US HDG price assessment (August 16) was $1,113.25/st, a nearly 39% drop since early May. Prices for CME HRC steel have also dropped during this time period, as have CME HDG Premium prices. However, production curtailments could lead to higher HDG prices. American consumers of HDG steel can use a combination of CME HRC and CME HDG swaps to hedge their physical usage. Buying swaps can upside price protection, as it would establish a maximum price. Such positions are standard for end-user hedging; however, they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (8/23/2022)

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Price Indications

Today's Charts

AEGIS Insights

8/17/2022: AEGIS Factor Matrices: Most important variables affecting metals prices

8/16/2022: Zinc Prices Are On The Rebound Due To Supply Issues

8/9/2022: Aluminum prices are finding support: Consumers can lock in lower costs in 2023 and beyond

8/2/2022: Russia Finds New Alumina Supply

8/22/2022: Climate disasters risk putting a damper on electric-car making

8/22/2022: European gas prices surge on renewed Russian gas supply uncertainty

8/22/2022: Japan's Tokyo Steel cuts sales prices on weak demand

8/22/2022: Japan’s ferrous scrap outlook mixed

8/19/2022: Rising zinc costs likely to squeeze HDG margins

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. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.