• Sunday, 18 August 2019

CRU - FOB US Midwest HRC Pricing: New Research Reveals Market Preferences


LONDON: Physical market preferences for attributes of FOB US Midwest mill HR coil (HRC) prices have recently been established by independent market research.

Key findings are that weekly FOB US Midwest mill prices are regarded as more accurate than daily; a price being transaction-based is more important than being daily, including for the purpose of physical contract settlement; the reputation of the Price Reporting Agency (PRA) is important, as is the association of a physical price with a financial derivative (futures/options) contract.

Highlights

Physical market preferences for attributes of FOB US Midwest mill HRC prices have recently been established by independent research of the market at large. The physical steel market in North America remains committed to CRU's FOB US Midwest HRC price, according to these findings, which in summary are

Weekly FOB mill US Midwest prices are regarded as more accurate than daily, with 91.3% of survey respondents indicating this as their view;
A price being transaction-based is more important than being daily for the purpose of physical contract settlement in 88.4% of answers;
The reputation of the Price Reporting Agency (PRA) is considered important to all responders, with 73.9% rating this as 'very important';
The association of a physical price with a financial derivative (futures/options) contract is seen as important or very important by 63.7% of responders.

Research objectives and methodology

CRU has a long-established and proud history of serving the market with its US Midwest prices, but index-based pricing has moved in and out of favour, and alternatives to CRU prices have presented themselves. CRU welcomes all forms of choice in the market. With this context, CRU commissioned third party research in order to clarify current attitudes towards price frequency, methodology and use of financial derivative contracts by the industry. We commissioned similar research in 2015 and this year we repeated and extended it to help ensure CRU's services continue to meet market requirements.

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CRU - FOB US Midwest HRC Pricing: New Research Reveals Market Preferences

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