Hedging steel price risk

A question from Yahoo! Answers:

Does anybody know how to hedge the risk of soaring steel price? We bought steel a lot! Thanks.?

Is there any financial product (index or steel portfolio, or derivatives) we can purchase to hedge?

To the best of my knowledge, the only place where steel derivatives (more specifically, scrap metal futures) are traded is Japan. The London Metals Exchange (LME) plans to launch steel futures, but so far that has not happened.

Most companies that hedge steel prices usually so it with OTC swaps. Here’s an example of one company that provides swaps in the steel market.

This entry was posted in Answers, Business. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *