FLACK CAPITAL MARKETS FAQS

Flack Capital Markets is a division of Flack Global Metals. Backed by Flack Global Metals’ balance sheet and responsible for all derivative trading activities at the company, Flack Capital Markets manages market price risk, speculative positioning and market making in HRC and other ferrous products. Flack Capital Markets also handles Structured Transactions, allowing others within the industry easy entry into risk management:

• Core – Flack Global Metals originates the physical supply
• Directed Buy (DBST) – Customer originates physical supply

Directed Buy Structured Transactions allow customers to convert a floating price arrangement into a fixed price arrangement (or vice versa) separate and distinct from their physical supply agreements.

Customers negotiate supply contracts with their desired producers and supply chains. The customer then sets up a “Directed Buy” with Flack Capital Markets, allowing it to assume responsibility under the negotiated supply contract. Flack Capital Markets works with the customer to convert the pricing within the supply contract to the customer’s desired pricing structure. Flack Capital Markets manages the hedge placement, passage of information, and any “A La Carte” services. As material is produced, Flack Capital Markets will purchase and pay the supplier while simultaneously invoicing the customer at their agreed upon pricing structure.

Cost are structured as a fee for service and are determined on a case-by-case basis. Ultimately, Flack Capital Markets costs amount to the cost of a grade extra, which is insignificant relative to the long term costs of buying on floating index contracts, fixing prices only once a year, and most importantly, riding the volatility of the domestic steel market.

Flack Capital Markets is where the physical meets the financial. It is the most sophisticated ferrous risk management group in North America, built along side and in conjunction with Flack Global Metals’ physical distribution business.

• Banks will help you swap pricing, but won’t touch the physical. Flack Global Metals manages the challenges of the physical supply chain on a daily basis, and Flack Capital Markets has incorporated those solutions into its products.
• Flack Capital Markets allows you to leverage its long-standing, best-in-class risk management group to seamlessly manage price risk. When using Flack Capital Markets, customers don’t need to worry about, or pay for, traders, brokers, clearinghouses, ISDAs, hedge accounting or risk management systems.

Flack Capital Markets’ success as an asset management group proves its expertise in ferrous markets, and allows customers to leverage Flack Capital Markets’ research and analysis to make the best possible decisions for their business. By becoming a member of the CME and purchasing two seats on the exchange, Flack Capital Markets provides liquidity in ferrous markets, allowing customers to receive the best possible price over the long term.

The customer is always able to exit their Flack Capital Markets pricing structure should they wish to revert back to their original pricing structure. DBSTs offer several choices for handling the reconciliation of any gains/losses.  

Directed Buy Structured Transactions (DBSTs) are designed to allow maximum flexibility for the customer. At the customer’s direction, Flack Capital Markets can convert into or out of any pricing structure, allowing the customer to adapt to changes in their business, capitalize on expected price movements or take advantage of opportunities on the curve.

Yes – multi-year contracts are encouraged. Flack Capital Markets’ products allow for separating physical supply from pricing. Securing long-term supply agreements, while continuously and systematically managing price risk, creates the most certainty over time.