Predicting the unpredictable

The increasing uncertainty and volatility of steel markets make price risk management more essential than ever.

If you don’t ignore the problem, perhaps you respond to it with hand-to-mouth purchasing, physical stock holding or formula-based supply agreements.

However, managing cash is much easier than managing the supply chain.

We just need to get paper contracts right.

Example
A steel user wants to budget its cost now for delivery beyond the spot market.

Without a paper market, the user’s options are confined to the following:

Paper contracts offer a third option:
Reframing
This logic applies to the whole value chain.

For a paper market to develop, we just need to reframe from entirely “physical” to “hybrid” thinking:

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On SteelHedge, the users may anonymously scan the market for hedging opportunities and conclude paper contracts that complement supply agreements.

Paper contracts

When compared to supply agreements, SteelHedge Contracts offer several benefits for price risk management:
b

Simplicity

With only 3-5 variables (price index, quantity, time period; plus optional pricing corridor and post-trade processing), they are easier to manage than procurement, production, logistics, financing, payments, claims, etc.

Security

A third-party protection against contractual default brings certainty and fosters healthier customer relationships.

Liquidity

Your suppliers and customers may be uninterested in price risk management. A global hedging market is far wider than your regular supply chain.

f

Flexibility

Pricing corridors and multiple data points help customize each contract to each hedger’s economic situation while keeping basis risk low.

Prices and circumstances change but simple rules of paper contracts stay constant.

It is in best interests of steel market participants to develop a paper market entirely focused on their needs.

Now YOU may become a driving force in price risk management.

SteelHedge Contracts
When compared to supply agreements, SteelHedge Contracts offer several benefits for price risk management: 

Simplicity

With only 3-5 variables (price index, quantity, time; plus optional pricing corridor and post-trade processing), they are easier to manage than procurement, production, logistics, financing, payments, claims, etc.

Flexibility

Pricing corridors and multiple data points help customize each contract to each hedger’s economic situation while keeping basis risk low.

Security

A third-party protection against contractual default brings certainty and fosters healthier customer relationships.

Liquidity

Your suppliers and customers may be uninterested in price risk management. A global hedging market is far wider than your regular supply chain.

Prices change but simple rules of paper contracts do not.

It is in best interests of steel market participants to develop a paper market entirely focused on their needs.

Now You may become a driving force in price risk management.

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