ArcelorMittal, Tata Steel to Start Hedging Iron Ore

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ArcelorMittal and Tata Steel are dipping their toes into iron ore derivatives, marking a crucial milestone in developing trade for the world’s second-largest commodity after oil.

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Although the steelmakers continue to say publicly they do not use such products, sources told ZeeNews India that ArcelorMittal hedged a block of iron ore trades in September while Tata recently decided to use derivatives on a small scale next year.

Prices of iron ore – a key steelmaking input – have been volatile this year, falling 48 percent. While this should increase hedging needs, some experts say weak prices might temper enthusiasm among smaller steelmakers for hedging.

Chinese slab saw a 9.7% increase on Thursday, December 11, reaching CNY 3,180 ($514.84) per metric ton and making it the biggest upwards shift of the day. The price of Chinese HRC remained essentially flat at CNY 3,060 ($495.42) per metric ton. The price of Chinese coking coal continues hovering around CNY 1,080 ($174.85) per metric ton for the fifth day in a row. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($136.00) and a low price of CNY 840.00 ($136.00) per dry metric ton.

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The steel billet cash price saw little movement on the LME at $500.00 per metric ton. The steel billet 3-month price saw essentially no change on the LME for the fifth day in a row, remaining around $480.00 per metric ton.

The spot price of the US HRC futures contract declined 0.3% to $614.00 per short ton. The US HRC futures contract 3-month price weakened by 0.2%, settling at $617.00 per short ton.

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