Steel Futures and Price Hedging Workshop

1. Steel Prices – What Happened and Why – A Witness to History
2. Steel Cost – What Can I Do About It – Planning for Uncertainty
3. Steel Futures – What is Happening and Where – A $25 Trillion Market
   1. NYMEX vs. LME vs. OTC – Financial vs. Deliverable vs. Swap
   2. What does all this mean for us, our customers, and our competitors?
   3. How do we take advantage of this opportunity?
4. The Five C’s of Hedging
   1. Control
      1. Planning your bottom line in advance
         1. Without a hedge, you are speculating
         2. Don’t be left at the mercy of the market
      2. Combine existing market risk (that you already have) with an equal but opposite financial risk (steel hedge)
      3. A true hedge has no losers
   2. Concepts
      1. Futures, Swaps, Options, Collars, Etc.
      2. Give up the plus to avoid the minus
      3. Buy & sell as you always have
      4. Use the hedge cash flow to offset price movement up or down
   3. Correlation
      1. Converting internal data to external indexes
      2. Nobody but you cares what you actually pay
      3. Basis Risk – the hidden land mine
   4. Credit
      1. Credit limits, Margin calls, Mark to market
      2. What you should expect from your counterparty
      3. What will be expected of you
   5. Command
      1. From the Board to the trader to the documentation
      2. No Monday morning quarterbacking
      3. FAS 133
      4. Sarbanes-Oxley
5. What Next – The 3 Requirements for Every Company
   1. Educate yourself
   2. Designate a Chief Risk Officer
   3. Establish a relationship with a firm that can execute your transactions

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About the Speaker