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Steel

Steel is created from iron ore and carbon, and on occasion, other elements such as manganese and tungsten. It may also be recycled through electric arc method furnacing.

It is relatively inexpensive to produce, strong and used in a wide variety of applications.

An average commercial steel building costs between $16 and $20 per square foot, including building package (I-Beams, purlins, girts etc.), delivery, foundation and the cost of construction.

Generally, the price of steel has been dependent on economic output but other factors that may affect its price include:

  • The price and availability of its constituent parts; for instance, iron ore
  • Geo-political developments
  • Developing technologies

Steel Trading

Steel is an important alloy made up of iron and carbon. Adding carbon creates a much stronger substance than pure iron, making it ideal for use in the construction of infrastructure such as roads and railways. Steel skeletons are also used to support large modern structures such as stadiums, skyscrapers, bridges, and airports. It is used in every aspect of our lives from surgical scalpels to cargo ships, cars, refrigerators, and washing machines. The incredible strength and durability it exhibits along with its relatively cheap production cost make steel the most widely used metal on Earth. Given these characteristics and that in 2015, 1.621 million tonnes of steel was produced, the global steel trading industry plays an intrinsic part within metals and commodities.

The steel industry is a very tight market with multiple traders competing for the same clients within their product segment. Redstone Commodity Search have a strong network with worldwide candidates including:

  • Steel Traders
  • Steel Sales Managers/Accounts Manager
  • Steel logistics and operations managers
  • Steel Purchasers etc.

We focus primarily on solutions for middle and front office positions and we work together with small, middle and large Trading Houses, Producers, Majors, Merchants, and Investment Banks. Our metals team has excellent knowledge of the steel industry and completed assignments in Africa, Asia, Middle East, Europe, USA and LATAM. Recent hires our metals team has been responsible for include:

  • China Sourcing Manager (Flat Steel Products), China
  • Steel Marketing Director, China
  • Billets and HRC Steel Trader, Vietnam
  • Europe and North African Steel Trader (HRC/CRS/Plates), Switzerland
  • Steel Documentation Specialist, London
  • Flat and Long Products Trader, Houston

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Financial Trading is not suitable for all investors & involved Risky. If you through with this link and trade we may earn some commission.

What is Steel?

Steel is a strong, durable metal which belongs to the ferrous metals group. There are many different types of steel depending on the combination of other elements mixed in with the iron and the carbon content in the final product. Varying combinations mean that there are more than 3,500 different grades of steel with many different physical, chemical and environmental properties. As a physical commodity, steel is traded as crude or raw material. There are two primary methods for creating steel:

  • The Blast Furnace-Basic Oxygen Furnace Method – Steel is made by dissolving carbon into iron. Iron ores are reduced to iron (also called hot metal or pig iron). When iron is exposed to an extremely high temperature, carbon readily dissolves into the molten metal, generating a liquid solution. From the blast furnace, the iron is an alloy of about 96 per cent iron with carbon and some impurities. At this stage, the product is too brittle for most uses so the iron is converted into steel by removing some of the carbon. Oxygen is blown into the molten metal to remove the carbon which reacts with the oxygen to produce carbon monoxide and carbon dioxide. The gases then escape the metal, reducing the carbon content. 70% of steel is produced in this way (read more about this method).
  • Electric Arc Furnace (EAF) Method – Primarily uses electricity to melt recycled steels. Additives, such as alloys, are used to adjust to the desired chemical composition.

The molten steel is cast and rolled into different shapes and products.

  • Semi-finished products – produced by the continuous casting of liquid steel or by rolling or forging of ingots. They are used in the industry for the further production of finished steel products. Semi-finished products include slabs for rolling and billets.
  • Long products – heavy construction product steels, used in fabrication and engineering applications. Examples of long products include merchant bars, structural sections, reinforcing bars (rebar) and wire rod. Long products are particularly used in the construction and engineering industries.
  • Flat products – produced by rolling and mechanising slabs until the desired shape is achieved. There are two major flat steel product categories: thin, flat products, and plates. Examples of flat products include:
    • Hot rolled plates (HRP)hot rolled coils (HRC), hot rolled sheets (HRS) and hot rolled strips;
    • Cold rolled coils (CRC), cold rolled sheets, cold rolled strips;
    • Pre-painted and galvanised products include coils, sheets, weld mesh, corrugated sheets, perforated sheets, pipes, box sections, tube sections, and angles.

Chromium is added to carbon steel to create stainless steel. The chromium makes the steel rust and stain-resistant. Examples of stainless steel use include cutlery and sinks. Stainless steel is available in all of the commonly required forms for industry including sheets, coils, plates, bars and sections as well as tube and pipe fittings.

Steel can be easily recycled and traded as scrap metal or melted to create new products.

Physical Steel Trading

Steel traders buy and sell different steel products worldwide. Most traders are specialised on specific product ranges (longs, flats, scrap, stainless etc.) and they also focus on different countries/geographical area. Steel traders look to increase the revenue for their company by strengthening and growing their customer base, promoting the company’s products, and tapping into new markets.

China is by far the largest producer and exporter of steel in the world, followed by Japan, South Korea, and Russia. The EU, the USA, Italy, Turkey and Vietnam are among the top importers of steel globally.

Go to Live Trade with FXTM – The #1 Broker.

Financial Trading is not suitable for all investors & involved Risky. If you through with this link and trade we may earn some commission.

Who are the Customers?

  • Aerospace manufacturers
  • Car manufacturers
  • Construction industry
  • Defense manufacturers
  • Domestic electrical appliance manufacturers
  • Energy and power sector (e.g. oil/gas and structures etc.)
  • Mechanical/industrial equipment manufacturers
  • Packaging and utensil manufacturers (e.g. tins, tools)
  • Rail infrastructure operators
  • Shipyards

Hedging and Derivative Steel Trading

Given the high volatility of the commodities market, the price of steel is subject to wild fluctuations. Since the steel market price is affected by a wide range of factors, both steel producers and traders hedge their price risk daily. Steel hedging allows risk managers to mitigate the risk of losing money if the steel prices are moving and they commonly hedge on exchanges like the London Metal Exchange (LME) and the New York Mercantile Exchange (NYMEX). Also, an over-the-counter (OTC) market in steel hedging has been developed, offering traders the opportunity to use derivative products like options and swaps.

Steel Rebar is mostly traded on the Shanghai Futures Exchange and London Metal Exchange. The standard future contract is 10 tons. Steel is one of the world’s most important materials used in construction, cars and all sorts of machines and appliances. By far the biggest producer of crude steel is China, followed by European Union, Japan, United States, India, Russia and South Korea. The steel prices displayed in Trading Economics are based on over-the-counter (OTC) and contract for difference (CFD) financial instruments. Our steel prices are intended to provide you with a reference only, rather than as a basis for making trading decisions. Trading Economics does not verify any data and disclaims any obligation to do so.

Shanghai steel futures bounced back to above CNY 5,100 a tonne, after hitting a one-month low of CNY4940 last week, as demand concerns eased after China reported no new coronavirus cases for the first time since July, a sign the current outbreak in the country may be waning. China is by far the largest producer and consumer of steel. Still, steel prices remain well below a record high of CNY 6198 a tonne reached in May, as China pledged to limit crude steel output in 2021 at no higher than 1.065 billion tonnes it made last year. Meanwhile, China’s domestically-produced iron ore concentrates slipped for a 4th week on August 16-20, amid lower demand from Chinese mills due to lower steel output, according to Mysteel.

Multi Commodity Exchange of India (MCX) kicked off futures trading in steel on Thursday – becoming one of the commodity exchanges in the world to trade in steel futures. MCX has adopted the CTCL technology used in the equities and derivative markets for use in commodities trades.

The price of steel as of July 2021 is up over 200%, trading at $1,800, and many involved in the market don’t see the price reducing until at least 2022.

Go to Live Trade with FXTM – The #1 Broker.

Financial Trading is not suitable for all investors & involved Risky. If you through with this link and trade we may earn some commission.

Myanfx-edu does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors.

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