3/16/2012 — The commonplace use of steel futures contracts is either inevitable or inedible, depending on whom you asked at Platts Steel Business Briefing’s Steel Markets North America conference March 15 in Chicago.
“It’s just another attempt by people who have nothing to do with our business to try and grab a share,” said Metals USA ceo Lorenco Goncalves. “Customers that talk about futures, they have no idea what they’re talking about.”
Flack Steel ceo Jeremy Flack countered that customers who are looking to fix their costs in an increasingly mercurial market need a financial hedging option.
“The attitude in our industry is going to change. I don’t like Facebook, but I have to get on it,” he said. “I feel that if we’re going to do a good job as an industry in helping our customers develop their own markets, we need to figure out how they go to market and mirror them.”
Mark Breckheimer, president of Kloeckner Metals’ heavy carbon group, said futures are likely to take hold faster where the stakes – and tonnages – are larger.
“(Customers) are looking for certainty of supply,” he said. “(But) there is a reluctance from smaller companies because there is an associated premium.”