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Steel Hedging Services

Explore HRC (Hot Rolled Coil) hedging with Barsteel. Since our first trade in 2021, we've used HRC Futures to manage price volatility, hedging over 20% of our order book. By partnering with us, you gain access to our advanced trading infrastructure and transparent pricing, helping you save costs and stabilize your supply chain. Learn how steel hedging services can be a strategic tool for your business' steel product purchases.

Frequently Asked Questions About Steel Hedging Services

Steel hedging services give manufacturers and end users of steel coil and sheet greater control over price risk. By locking in pricing through hot-rolled steel futures hedging, Barsteel helps customers protect their margins, improve forecasting, and reduce the uncertainty that comes with market volatility.

What is steel hedging?

Steel hedging is the use of a financial futures contract to lock in the price of physical steel today, shielding buyers from unpredictable market swings. This approach ensures more stable and predictable costs for businesses that rely on steel products.

How does hot rolled steel hedging work?

We make the process seamless for our customers by putting a financial transaction (the HRC Futures contracts) and a physical transaction (the purchase of steel coil) together to offer our customers a fixed price. Once the strategy is in place and the trades have been executed, the customers price is fixed and will not change, thus reducing price risk.

What are the requirements to use Barsteel’s steel hedging services?

The only requirement is a purchase order for at least one truckload of steel slit coil or sheet. This makes it easy for both new and existing customers to engage in steel hedging risk management with minimal barriers.

What are the benefits of steel hedging for manufacturers?

Steel hedging provides three major advantages:

Price stability: Protects against unexpected price increases that could erode margins.
Improved budgeting: Fixes costs into the future, making financial planning more accurate.
Reduced risk: Gives manufacturers confidence to take on larger contracts without worrying about steel price volatility.

Let Us Show You How Hot Rolled Coil (HRC) Futures Can Be Used to De-Risk Your Supply

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What you should expect when partnering with Barsteel to hedge your steel supply…

Access: Access to Barsteels internal trading infrastructure.
Information: You tell us how involved you want to be in the hedging process. We can update you with prices daily, even intraday, in an easy and accessible format.
Transparency: 100% transparency into transaction price and control over prices at which we execute trades.
Optionality: Most OEM’s either buy on the spot market or contractually on an index deal. Hedging in the forward market is another tool in the toolbox to ensure long term success.

Case Study

In July 2023, Customer X was interested in locking in price on 300 tons for December 2023 and January 2024 rolling. They had a price set with their end customer and did not want price risk hanging over their heads.

In July we accessed the futures market and secured December and January rollings at $769/ton ($38.45/cwt) and $812/ton ($40.60/cwt), respectively, for an average price of $790/ton ($39.50/cwt).

Had the customer stuck with their original plan to buy in the spot market, their price would have been $987/ton ($49.35/cwt) and left them with low or no margin.

The net benefit to the customer was twofold.

1 – They saved $59,000 on 300 tons by utilitzing the futures vs spot price.

2 – In July 2023, they already had full transparency into their steel cost for end 2023/early 2024, locking in their profit and eliminating price risk.

Our History with Hedging

Since executing our first single lot (20 ton) trade in 2021 Barsteels hedging activities have evolved. Today, more than 25% of our order book utilizes our hedging services as part of their overall purchasing strategy. The majority of our customers that utilize hedging are repeat hedging customers. Once an OEM experiences the benefit firsthand, they typically incorporate it into their purchasing strategy.

Hot Rolled Steel Futures Hedging is not the ONLY answer. It is ONE strategy to employ where it makes sense for your supply chain. Contact us to learn more about steel hedging risk management services.