LONDON, Feb, 25, 2020 /PRNewswire/ -- CRU's U.S. Midwest hot-dipped galvanised (HDG) coil base price index will be used in the settlement of the CME Group's new cash-settled U.S. Midwest Domestic Steel Premium (CRU) Futures contract. As announced earlier today by CME Group, the contract will settle on the premium of CRU's HDG coil base price over the established CRU U.S. Midwest HRC index and is due to launch on 23 March 2020.
Having served the market for over 30 years, CRU's U.S. Midwest HDG coil base price adheres to exactly the same methodology as CRU's recognised U.S. Midwest HRC price. It is based exclusively on transaction data, is volume-weighted, a balanced representation of buyers and sellers and is overseen by expert industry analysts based in Pittsburgh. CRU has a number of steel and other commodity specialists based here and elsewhere in North America.
Together with the existing CME HRC contract settled on CRU, the U.S. Midwest Domestic Steel Premium (CRU) Futures contract will complement the existing HRC contract to provide the downstream market with an additional price risk management tool. Crucially, it is based on the physical market's most adopted prices.
"We are delighted to work with CME Group and extend our service to physical and paper markets, building on our established position in the flat-rolled market in North America. Market volatility has not gone away, and we are pleased to support additional risk management tools whilst providing the most trusted and reliable physical prices to the market," CRU Head of Prices Development Chris Houlden said.
"This new hedging tool for the downstream flat steel market is a welcome additional price risk management tool. It will allow for more precise hedging, benefiting the entire ferrous supply chain," added Jeremy Flack, founder and CEO of Flack Global Metals.
"Our clients across the ferrous supply chain continue to look for tools to hedge price risk, including for hot-dipped galvanized steel," said Young-Jin Chang, Global Head of Metals Products, CME Group. "We are pleased to provide the downstream market with a new way to price and manage their exposure to changes to hot-dipped galvanized steel, as we continue to expand our growing ferrous product suite."
CRU is an independent, privately owned, price, analysis, consulting and events business specializing in the mining, metals and fertilizer sectors. Founded in the late 1960s and headquartered in London, it has over 280 employees worldwide and has analysts and price assessors in London, Pittsburgh, Santiago, Delhi, Mumbai, Shanghai, Beijing, Singapore and Sydney.
The company delivers independent market analysis and price assessment across a comprehensive range of global commodities – its reputation with customers across mining, metals and fertilizers is for integrity, reliability, independence and authority.
CRU's U.S. Midwest flat-rolled prices are transaction-only weekly price benchmarks. Use of transaction data alone as data inputs to this price ensures that it accurately reflects the actual spot market with no risk of information from sentiment, errant opinion, speculative or even confirmed but ultimately unexecuted bids and offers entering the published price. For more detail on applicable methodology and definitions, please click here.