CRU: HR Coil Price Volatility: Buckle up with Leading Contract Options

LONDON, May 1, 2019 /PRNewswire/ -- Steel price volatility has increased markedly in recent months as opaque policy decision making processes and inelasticity of domestic supply have led to large variations in physical market price. Volatility was vastly increased last year by Section 232, but continues to this day and is expected to persist, not least as the evolution of Section 232 is unknown. One consequence of physical market volatility has been a surge in volume and open interest on North America's largest steel futures contract, CME Group's hot-roll coil futures and options contracts*, settled on CRU's US Midwest HR coil price, knows as "The CRU".

• Volatility in the benchmark CRU US Midwest HR coil price has surged, with standard deviation increased from $19 /s.t in 2017 to almost $75 /s.t in 2018 with little sign of narrowing in 2019;
• Open interest in the CME's CRU-settled futures and options contracts increased 14% y/y in 2018 Q4, over 37% y/y in January 2019 and 50% y/y in Q1 2019.

CRU's Head of Finished Steel commented "For the vast majority of those who use index-based steel pricing in the physical market in the USA, hedging using the US Midwest Domestic Hot-Rolled Coil Steel futures contract from CME Group looks like an attractive option. This is settled on CRU's US Midwest physical price, the physical market HR coil benchmark in North America.  Together, these provide the market with the most reliable physical market price data plus a means to manage price risk in what has proved to be a more volatile pricing environment. Today's physical market HR coil price is $679 /s.ton, down more than 25% from just 10 months ago."

Read the full story: https://www.crugroup.com/knowledge-and-insights/insights/2019/hr-coil-price-volatility-buckle-up-with-leading-contract-options/ 

Read more about CRU: http://bit.ly/About_CRU

About CRU

CRU offers unrivalled business intelligence on the global metals, mining and fertilizer industries through market analysis, price assessments, consultancy and events.

Since our foundation by Robert Perlman in 1969, we have consistently invested in primary research and robust methodologies, and developed expert teams in key locations worldwide, including in hard-to-reach markets such as China.

CRU employs over 280 experts and has more than 11 offices around the world, in Europe, the Americas, China, Asia and Australia – our office in Beijing opened in 2004 and Singapore in 2018.

When facing critical business decisions, you can rely on our first-hand knowledge to give you a complete view of a commodity market. And you can engage with our experts directly, for the full picture and a personalised response.

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