September 15, 2022

Due in part to falling demand, the Argus HRC index has fallen by nearly 50% this year. Argus’s latest spot HRC assessment, released on Tuesday, was $800/st, a $20/st increase from the prior assessment. Despite the price jump, Argus reports that service centers are still “holding off” on replenishing stockpiles and are only buying short-term needs. Contract negotiations for 2023 are currently ongoing, with at least one source telling Argus that “value-add” prices are down 4% from last year. As for supply, continuing contract negotiations between the United Steelworkers (USW) union and US Steel could change the supply picture if either side walks away from the negotiating table.

Like Argus’s assessment, CME HRC Steel prices have also tumbled in recent months. Due to the recent downward price pressure, the forward curve for HRC has shifted lower by nearly $140/T since mid-June.  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. (9/15/2022)

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Price Indications

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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.