Second only to the international crude oil market, the ferrous industry accounts for a significant and growing amount of global economic activity driven by robust demand from China and other emerging economies. In recent years, this industry has begun a transition in pricing practice from annual benchmark to shorter-term or spot market pricing. While this adds greater accuracy and timeliness to value determination, it also brings with it higher price volatility and financial risk all along the supply chain. So how are market participants adapting and thriving in an increasingly uncertain environment? In a word, hedging.
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