Steel scrap is a global commodity and the most recycled material worldwide. According to the United States Geological Survey, apparent consumption of ferrous scrap in the United States in 2016 was estimated at 63 million metric tons. In addition, U.S. exporters sold 12 million tons into the 90 million ton global export market the same year.
At Nasdaq, we’re reimagining the markets of today to rewrite the status quo in energy and commodity futures. That’s why we welcomed the addition of Midwest U.S. Shredded Steel Scrap on Nasdaq Futures (NFX) in December 2017. The NFX Midwest U.S. Shredded Steel Scrap contract is an effective risk management tool providing U.S. steel companies, scrap dealers, steel consumers and financial institutions with an efficient instrument to handle price volatility exposure while introducing a high level of price transparency to the marketplace.
The cash-settled NFX Midwest U.S. Shredded Steel Scrap contract is based on the AMM Midwest U.S. shredded Steel Scrap Index.
American Metal Market’s Midwest U.S. Shredded Steel Scrap Index shows a high level of correlation with other U.S. Midwest scrap grade indices, e.g. the American Metal Market US Midwest #1 Heavy Melting Scrap Index and the American Metal Market US Midwest No. 1 Busheling Steel Scrap Index. It also complements global scrap indices such as the Metal Bulletin Ferrous scrap Index HMS 1&2 (80:20 mix) (USA material) cfr Turkey, creating both hedging possibilities and price exposure opportunities.
The steel scrap price is volatile and, as a result, many finished steel products made from steel scrap also face the same price volatility. NFX Midwest U.S. Shredded Steel Scrap Futures give steel mills, steel scrap dealers, exporters, service centers, contractors, demolition companies and other market participants the ability to manage that price risk. Prices for finished steel products like rebar and hot-rolled coil are generally determined by regional market conditions and government policy. Conversely, obsolete scrap is a global commodity where the price differential between regions is largely determined by the cost of freight. Hence, NFX Midwest U.S. Shredded Steel Scrap Futures can be an effective hedging tool for the steelmaker in India, as well as for the steelmaker in Indiana.
About American Metal Market
American Metal Market, part of the Metal Bulletin Group, provides information, including independent industry price benchmarks, for the metal and mining industry. It has published its Midwest ferrous scrap indices since 2010 and remains the benchmark for North American ferrous scrap pricing. Metal Bulletin Group assesses more than 2,000 prices in the steel, nonferrous and scrap markets.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
