Hedging Steel
Hi,
I work at a construction company. We are looking to hedge the price of steel. We have never done this before. Just wondering what are the steps and processes to take?
In theory, I know you do something like this: You buy/sell the contracts on paper market, say the nymex. You then make an opposite trade in the physical market.
What are the steps? Do we need to look at an investment bank to buy/sell the contracts on Nymex? How about your standard broker? What does an investment bank offer over brokers? How about metals traders?
How do go about ensuring the physical trades in the market? Do we look for a metals trader to help us do this? How do we guarantee the delivery at the set price? What are the risks involved?