HRC prices could see little upside this year, as steel producers see little reason to cut production, despite a nearly 50% drop in HRC prices so far this year. Steelmakers normally cut production after a steep drop in prices, according to Argus. However, in an interview with Argus earlier this week, Cleveland-Cliffs stated they do not expect the steel industry will experience production cuts. That said, other market participants feel the market is still oversupplied, further fueling a bearish sentiment. Likewise, market participants were disappointed that no major producers announced any potential production cuts during their 2Q earnings calls. Production in 2022 has hovered between historical, pre-COVID norms of 1.723 to 1.833 million st/week, according to the American Iron and Steel Institute (AISI). |
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Due to the recent downward price pressure, the forward curve for HRC has shifted lower by nearly $200/T since late May. This could be a good time for steel end-users such as automotive equipment manufacturers (OEMs) to hedge future needs into 2023 by buying swaps, as this strategy would establish a maximum steel price. We suggest using strategically placed limit orders in case prices weaken further. Such positions are standard for consumer 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. (8/25/2022) |
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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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Price Indications |
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Today's Charts |
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AEGIS Insights |
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8/24/2022: Chinese Aluminum Supply Issues Could Rally Prices 8/24/2022: 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 |
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Important Headlines | ||
8/23/2022: Cliffs CEO does not foresee sheet output cuts 8/22/2022: Strike at Alcoa’s Mosjøen smelter in Norway commences 8/22/2022: Ford cuts workforce amid EV push 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 |
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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. 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.
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