Ironclad Partnerships: Base Metals

Video transcript

[Super:] Across the globe, StoneX professionals draw on in-depth market knowledge and direct personal connections to deliver a unique advantage to clients that we call “boot on the ground.”

[Super:] Spencer Johnson Risk Management Consultant, StoneX Group Inc. – FCM Division.

Spencer: We’re very excited to be in Fort Wayne this week, uh, we’re going to be visiting two of our clients, one on ferrous side, Paragon Steel, and then another client on the non-ferrous side, a copper rod producer SDI La Farga. Part of what we do is beyond just giving them a facility to execute an order, we also want to learn about their business, get on the ground, figure out, you know, what are the problems that they have on a physical level with their business, not just the risks associated financially, uh, because it give you sort of the behind the scenes information that you don’t otherwise have and so I think it’s an important p[piece of the puzzle for us.

[Super:] Darren Stoody Hedge Manager, OmniSource Corporation

Darren: Some of the most challenging things of working in this market would be, sometimes it’s nonstop, it can be, honestly 24 hours a day, 6 days a week.

[Super:] Pete Henry, Vice President Paragon Steel

Pete: There’s a physical side and then there’s the futures market side of things. You know, decades ago we were very focused on what’s happening between, say, maybe Pittsburgh in the east and greater Chicagoland in the west and Birmingham in the southeast but in today’s world, what’s happening in Asia is definitely relevant, um, to some huge steel players and producers in other parts of the world. Turkey has become a big player in the scrap industry, rebar and other steel products as well, so Spencer and the team had up to the second information regarding what is happening, um, to ferrous products around the world and that helps us here in the midwestern US try to get a sense of where prices might be headed tomorrow and into next week.

Spencer: Really what we want to do is hold the client’s hand for the entry point where they take on the risk, which is when they pick up those bundles at the shipping yard and then all the way to the end product when these coils leave the door to their finished product customer, right, and the more we know about how that process works for them, the easier it is for us to devise a strategy for them to lay off the risk. So what we’re doing at this point, if I understand it correctly, is you’ve received the shipment of the scrap from the yard, and now we’re testing it for impurities to make sure that it’s what the yard said it was when they shipped it here.

Metal tech: Right. Yeah, every, every chop has a different spec of copper percentage and that’s basically what I’m testing for.

Spencer: You know, we have, over the years developed a level of trust with customers like this so that they know, you know, we’re here for them as much as we are for ourselves and we want this, you know, to be a joint process where we’re marketing on their behalf as much as we are marketing ourselves.

Pete: It’s a give-and-take relationship. We talk probably daily, on what they think the market’s doing, very interested in the commitment of traders report that comes out on Tuesdays and is published on Fridays. What they’re seeing in the market that we’re not seeing from the rest of the community, be it the hedge funds or merchant traders, how the order flow is moving, that’s very important to us, and we don’t see all that. They’re reaching out and communicating with them for that.

Darren: After it’s slit, recoiled and then banded up and packaged. It’s easy to discuss prices, you know, on a screen or on paper but I don’t think there’s a lot of value in understanding what we do with the steel, how we cut it up, how it’s packaged so I do think seeing how the material flows really will help the team understand the total picture of the hot roll coil industry.

Spencer: To me, boots on the ground is very simple it means being there for the customer in real life, you know, it’s one thing to talk to a customer on the phone or to chat with them via email, there’s something else I think that happens when you get to sit down with a client. Not only does it allow you to see sort of the full gambit of their fiscal operations, which can give you more insights into how to assist them with their risk technique but also it just creates a more personal relationship, and really, I think, help develop trust between you and the client. Ultimately that’s the most important thing for us, if the client can’t trust that we’re going to do the right thing for them then you know we’re not doing, really, is doing our job.

[Super:] Boots on the Ground