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US Steel will not restart its 1.4 million ton/year Mon Valley Works blast furnace after completing routine maintenance, according to Argus. A company spokesperson told Argus the shutdown will "balance our production with our order book." This is US Steel’s second plant idling since early September. On September 7, the company idled its 1.5 million ton/year blast furnace in Gary, IN, citing “market conditions and continued high levels of imports.” The Gary, IN closure, was the first closure by a US steelmaker due to deteriorating market conditions “in recent memory,” according to Argus. |
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Industry sources recently cited by Argus proclaim that the steel market is oversupplied. This has pressured steel prices lower, as the prompt month (October) CME HRC futures are down nearly 50% from the highs of mid-March. This could be a good time for steel end-users such as automotive original equipment manufacturers to hedge future needs into 2023 by buying HRC swaps. Using swaps converts a variable cost into a fixed cost, thereby ‘locking in’ a price for the hedged steel. Since HRC swaps are thinly traded, we suggest using limit orders to establish a specific steel price. 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. (10/5/2022) |
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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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9/28/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 8/31/2022: Will Chilean Production Issues Drive Copper Prices Higher? 8/24/2022: Chinese Aluminum Supply Issues Could Rally 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 | ||
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10/4/2022: Column: London Metal Exchange ducks Russian sanctions pressure 10/3/2022: AutoForecast cuts NorthAm production outlook further 10/3/2022: US Steel idles Mon Valley blast furnace 10/3/2022: BHP lifts steel consumption forecast on surging demand from renewable power farms 10/3/2022: Copper price pressured by crumbling demand |
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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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