In a discussion moderated by Alberto Hodo, LME Product Specialist, at the SteelOrbis 2026 Spring Conference and IREPAS 94th Meeting taking place April 26-28 in Amsterdam, panelists John Short, CEO of Boomer Commodities, and Philip Price, founder of Pool, highlighted the growing role of steel derivatives in risk management, liquidity creation and trading financing.
The panellists agreed that the market has changed significantly over the past decade, moving from a niche concept to a practical tool that is increasingly being used in the iron and steel value chain.
Hedging improves financing conditions
The panellists emphasized that financial institutions actively encourage the use of hedging instruments such as futures and swaps. According to John Short, companies that hedge price risk benefit from lower credit risk, which gives them access to larger volumes of financing at more competitive rates.
Structured trade finance is gaining momentum
A key development is the growth of structured trade finance linked to derivatives. Tripartite agreements between borrowers, banks and clearing brokers or exchanges allow lenders to track and monitor hedging positions, increasing transparency and security.
Philip Price noted that this model is already well established in commodities such as base metals and energy, and is now expanding to steel. Financing structures are also evolving from cargo-based lending to inventory financing, including scrap, while hedging price risks.
Despite concerns, liquidity in steel derivatives markets is not seen as a major constraint, panelists agreed. Significant volumes can be traded, especially in over-the-counter markets, allowing companies to hedge large risks such as long-term infrastructure and construction projects.
Dual Role: Risk Management and Pricing
Panelists noted that derivatives are increasingly being used not only for hedging, but also for pricing and positioning on the market. Compared to physical trading, derivatives provide efficiency
