- With the support of 18 of the largest banks and brokerages in the United States, Nasdaq launched NFX in July of 2015 offering a wide range of energy futures products. NFX is quickly growing its global commodity footprint with the recent addition of steel, and freight indices with a number of other markets soon to be announced.
- Nasdaq’s world-leading market technology powers more than 100 of the world’s market exchanges, clearinghouses, central securities depositories and regulators with end-to- end, mission-critical technology solutions.
- Nasdaq is one of the strongest and most technologically advanced exchanges in the world. Nasdaq employs more than 4,000 people to 2,500 people servicing businesses and investors from over 50 countries, in 26 cities, across six continents and is located in every capital market in the world. Nasdaq enjoyed a 2017 gross operating profit of $2.29 billion from $3.96 billion of total revenue.
- NFX clears its business through the Options Clearing Corp (OCC) the world’s largest equities derivatives clearing house. The OCC is 40% owned by Nasdaq.
Hot-Rolled Coil (HRC) Market
- Trade execution on NFX can be handled via voice brokers or directly through the any NFX registered bank or broker who provides electronic trading screens to their customer 24 hours a day, five days a week.
- The Hot-Rolled Coil market consists of hot-rolled flat-rolled carbon-quality steel products of a rectangular shape, approximately 0.2 inches thick and 4 to 5 ft. wide. HRC is extensively used in automotive body frames, wheels, pipes and tubes, floor decks in steel construction, transportation equipment, non-residential construction, appliances, heavy machinery and machine parts. Parties to hot-rolled steel market transactions include steel suppliers (i.e., integrated and nonintegrated producers), steel importers, and steel purchasers (i.e., large companies, steel traders, steel processors, steel service centers and end users).
- Large companies purchase their steel directly from either domestic mills or service centers hold inventory and distribute steel for industrial customers and perform first-stage processing. Steel service centers offer end users a more efficient and cost-effective means of obtaining desired steel products than steel producers or intermediate steel processors and possess the means to purchase, process and deliver steel. Steel purchasers consider a number of variables that influence the selection of a supplier, including quality (such as surface quality, chemistry and process control, gauge control, formability, cleanliness, shape, thickness, and tolerances), price, availability, delivery time, reliability, and service.
- The NFX US Midwest HRC Index futures contract is commodity grade, but the price paid in the physical market can vary depending on the “adders” such as: its carbon content, metallurgical properties and surface and edge qualities, the need, if any, for additional processing (i.e., pickling and oiling, temper rolling, edge trimming, cutting to size and weight and packaging), the nature of the purchase agreement (i.e., the quantity purchased and whether the agreement represents a single sale or multi-transaction contract), and domestic and international demand. The price of hot-rolled steel may also rise or fall depending on costs associated with raw materials (i.e., scrap steel, iron and coke), energy (i.e., electricity and natural gas prices, especially for mini-mills), transportation costs (i.e., shortages of vessels, rail, trucks and barges and oil prices) and exchange rates. USA Steel Market 2017: 58% of the USA’s 90.9 million tons of steel production in 2017 took the form of flat products like Hot-Rolled Coil (HRC), and its further converted Cold-Rolled Coil and Galvanized. Bar products (15%), plate (9%), structural (7%), pipe and tubing 4%) and wire products (3%) made up the other half. The US also imported 29.6 million tons of finished and semi-finished steel products, while exporting 10.5 million tons.
- Two-thirds of USA steel production is sold directly to end-use markets. The balance is distributed by service centers, converters and other processors. The largest markets are construction (43%) and automotive (27%). Other key markets are machinery, containers, and pipe and energy. Mani see below
Shredded Steel Scrap
- Trade execution can be handled via voice brokers or directly through the NFX state-of-the-art electronic trading platform, 23 hours a day, five days a week.
- 63% of the steel made in the U.S. is produced by EAFs (electric-arc-furnaces), whose primary feedstock is steel scrap. Shredded steel scrap futures provide the same risk management tool for steel makers and steel consumers that have had been employed successfully for decades by the non-ferrous metal, agricultural and energy industries.
- Annual consumption of US obsolete grades of steel scrap in 2017 was approximately 62 million tonnes, with an additional 14 million tonnes exported into the 90 million tonne world export market. In addition, there’s another 200 mmtpy of steel products made outside of China whose prices are highly correlated to the price of U.S. shredded scrap.
- AMM U.S. Midwest shredded scrap steel prices are 99.7% correlated to AMM U.S. Midwest Heavy Melting Scrap, 96.3% correlated to the MB Shredded Steel Scrap CFR India Containers price, 96% correlated the AMM U.S. Midwest Busheling price and 90.8% correlated to the AMM U.S. Midwest Rebar price.
- NFX is the only marketplace exchange to offer U.S. Midwest shredded steel scrap futures contracts. Shredded steel scrap is the first of a number of important steel products to be listed on NFX. Shredded scrap steel futures prices are the most reliably indicative and robust of any steel product listed on a Western futures exchange. Shredded steel scrap is the first of a number of important steel products to be listed on NFX.