Does anyone here know much about steel trading? I'm in base metals and I've been wondering why that industry is so separate from the non-ferrous metals sector. Is it because of the lack of a deep hedging market? Steel trading seems to involve a lot more finished products thanks to sheer volumes but billet trading (for which there is an LME contract), doesn't seem all that different from what you might see in copper or aluminum.
Anyone know who the 'best' firms are? Sorry for the vague term.
(Thanks for the billet picture!) Anyone? I realise this is ultra-niche.
RBRG was a decent steel/iron ore shop, Nucor or even C&F international are some known shops. You are correct in that it is a very niche industry, but definitely will grow over time as Iron Ore does and derivatives market grows for these metals.
Thanks man! Interesting how RBRG was Metalloyd and is now a part of Gerald. Seems like it might be symptomatic of a volatile industry. Then again the way even big guys like Noble are doing, doesn't seem like there are many safe seats in metals right now. We should grab a beer sometime, I'll pm you.
Not much of a market on the finished steel side to my knowledge. Large market for raw materials however. Many steel companies such as Nucor, USX, SDI, CMC, and smaller mills, own or have companies contracted to act as agents. Many of these companies will act as brokers and take positions. EAF shops will consume scrap which has a large market and is internationally traded, while some integrated shops will as well, but they are more focused on iron ore prices since it makes up the majority of what they melt. I know Nucor has invested heavily in a DRI (direct reduced iron, a scrap substitute) facility in Louisiana to hedge the price of scrap, since scrap is by far their largest cost. No liquidity in derivative markets so they are not used.
I hope this helps. Definitely an interesting industry but not very well known.
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