core sector communique

TSI launches daily US HRC reference price

The Steel Index (TSI) is increasing the publication frequency of its US hot rolled coil (HRC) reference price from weekly to daily from today, October 1, 2012.

This responds to industry demand for more frequent steel price information, as steel mills, traders and customers address the challenges of volatile pricing throughout steel markets. Within 2012, TSI’s US HRC price has seen a swing of nearly US$150/short ton from peak to trough.

“This is a great step forward,” comments Kurt Fowler, TSI’s Business Development Manager for North America. “It brings TSI’s US HRC price publication frequency into line with its European HRC prices, which have been published daily since July 1, 2011. These are now established as industry benchmarks and increasingly used as the basis for index-linked pricing and hedging arrangements in Europe. We anticipate this move to daily US HRC prices will provide the same benefits to the US market.”

The US HRC price is a leading global steel price indicator. Steel coils are the most widely used product in the steel market, accounting for around 40% of the 1.3 billion tonnes of steel consumed each year worldwide. At over 30 million tonnes, the US HRC market is one of the largest in the world, covering a wide range of applications such as construction, automotive, pipe-making and general manufacturing. HRC is also frequently further rolled into thinner gauges in the form of cold reduced coil (CRC) and, for many applications, galvanized. As a result, CRC and galvanized coil prices also typically track HRC price movements. 

TSI’s daily US HRC reference price is reported in US$/short ton, FOB Midwest steel mill - a standard reference point for US steel pricing. It is published on TSI’s website at 14:00 UK time (09:00 US East Coast time) every UK working day and distributed to its subscribers via a daily email. Historical prices for these and all TSI’s indices are also available to its subscribers on TSI’s on-line Price Analyzer. 

TSI revolutionized price reporting in the steel sector in 2006 when it began compiling steel prices based on transaction data submitted through its secure on-line system by key steel buyers and sellers. Since then TSI has won widespread industry support for the rigorous methodology employed in providing the steel, scrap and iron ore sectors with spot price information.

Many of TSI’s steel prices globally, including its US HRC price, are employed by steel mills, trading companies and steel consumers as the benchmark behind their physical pricing arrangements. TSI’s daily Northern and Southern European hot rolled coil prices are also widely used for hedging purposes, providing the basis for Over-the-Counter (OTC) steel swap contracts which can be cleared through LCH.Clearnet.

  

Note:

The Steel Index (TSI) is a leading specialist source of independent iron ore, steel and scrap price information based on actual transactions. TSI is also currently developing coking coal reference prices.

Iron ore price indices are published daily at 11:00 GMT. Daily steel prices for Northern Europe, Southern Europe and US HRC are published at 14:00 UK time and daily scrap prices for Turkish imports are published at 13:30 UK time. Weekly steel and scrap price indices are published every Monday and Friday respectively, with each price representing the average transaction price for the previous calendar week.

Transaction price data is submitted confidentially to TSI on-line by companies buying and selling a range of relevant iron ore, scrap and steel products. TSI’s index reference prices are then calculated using transparent and verifiable procedures.

TSI’s indices are widely used by steel mills, miners, traders, distributors and manufacturing companies worldwide as the basis for their physical pricing arrangements. TSI’s indices are also used as the industry standard in the settlement of ferrous financial contracts.

Singapore Exchange (SGX), LCH.Clearnet (London), CME Group (Chicago), NOS Clearing (Oslo) and Indian Commodity Exchange (ICEX) all use TSI’s iron ore index for settling their monthly cleared iron ore financial contracts. LCH.Clearnet also uses TSI’s prices for the settlement of two European hot rolled coil steel swap contracts and its Turkish imports scrap contract. In all cases, settlement prices are the average of TSI’s reference prices published in the expiring month.

TSI is a Platts business, part of the McGraw Hill Companies. Further information on TSI, including a free trial of the service, is available at http://www.thesteelindex.com/.