Futures

Flack Global Metals Becomes CME Group Member Firm

Written by David Schollaert

November 16, 2021

Flack Global Metals (FGM) is now a member of the CME Group, making it the first North American metals distributor to join the derivatives marketplace, the company said on Tuesday.

FlackMetalsThe Cleveland-based service center said the move will allow its risk management team to provide even greater liquidity to buyers of flat-rolled products as well as hedging services.

“When we founded FGM over a decade ago, we embedded the HRC forward curve into every aspect of our company,” FGM Founder and CEO Jeremy Flack said. “It was our belief then – and is even more so today – that hedging is the best way to provide certainty in securing metals supply and pricing. We have always relied on the products of the CME, so it seems only fitting that we now become a member firm.”

Through CME Group’s derivatives marketplace, clients can efficiently manage risk and capture opportunities by trading futures, options, cash, and OTC markets, optimize portfolios, and analyze data. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals.

FGM said the recent price rally in steel and other metals has raised interest in and acceptance of hedging as a means for OEMs to control their material costs. In joining the CME, Flack thinks his company will continue to lead an industry that is evolving away from index-based pricing to other mechanisms.

“The COVID-fueled price increases over the last 18 months have made OEMs more receptive to alternatives to index or spot buys,” said Flack. “It is hard to argue with the numbers. Our customers who actively hedged this rally are expected to save over $600 a ton this year. That will equate to over $50 million we will have saved our customers by using the CME HRC contract. By being CME floor members, we will continue to add to the liquidity of this product to aid all steel buyers who choose to hedge.”

By David Schollaert, David@SteelMarketUpdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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