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Tell us about your role at Anglo American and the company’s role in the steel industry.

Anglo American is a global mining company that plays a key role in the steel industry by supplying essential raw materials like iron ore and metallurgical coal. These are the building blocks of steel production. Recently, the company has also been focusing on sustainability by incorporating in its product portfolio secondary materials like steel scrap to make the steelmaking process more environmentally friendly.
In my role as part of the Recycled Steel Trading team, I manage the trading book, which involves hedging our physical positions and providing real-time market linked pricing to our partners.

How did you get started working in the steel industry?

Somewhat unexpectedly really! During the Covid years I worked for a small start-up in West Africa, trading base metal concentrates. Unfortunately, we ceased operations when our finance partner ran into trouble and we couldn’t secure a replacement in good time. From there, I took on a short-term role in risk reporting overseeing the Recycled Steel book at Anglo. To my luck, there was an opening on the desk and I was granted the opportunity to join the trading team.

What do you like best about trading steel derivatives?

One of the best aspects of my job is the level of human interaction, and this is what really separates steel derivatives from other more mature financial markets where it can feel like you are operating against machines at times. Each day I find myself interacting with suppliers, customers, agents, brokers – all with very different and interesting perspectives on the markets. We can then utilise this information to create a gestalt of the market and develop trading strategies. 

How does Anglo American use LME steel prices and futures as part of its risk management?

LME steel prices are a key part of price discovery which we often take into account when pricing our physical material sales and purchases. By marrying the futures to the underlying steel commodity, we are able hedge against price volatility, a key risk associated with holding large physical inventories. Additionally, we have the ability to capitalise on inefficiencies between physical (spot) and futures pricing to the benefit of our partners.

Has your risk management strategy changed as the LME’s steel contracts have grown?

The growth in traded volumes both OTC and on screen has certainly aided our ability to grow rapidly as a physical business without taking on excessive risk. Over the past year, we have witnessed an increasing number of market participants from a variety of different industries, both physical and financial. Just a few years ago hedging a short-sea cargo using steel derivatives would have been challenging. Yet today there is comfortably enough liquidity to execute deep-sea cargoes at workable price levels. I see this trend continuing up to the point where exchange traded volumes vastly outweigh the physical transactions underlying them, as seen in iron ore. 

Can you tell us about the most interesting trade you have structured?

The accumulation model at our Newport Scrap Terminal was particularly interesting, as we knew it could work in principle, yet it had never been attempted before in practice (at least to my knowledge). Traditionally, steel scrap recyclers operated a cost-plus model for sales, or took a market view by booking sales and employing cost averaging strategies on purchases to cover this short exposure. Each of these approaches inherently carries price risk, which can lead to extended periods of holding inventory hoping for prices to rise, or forced sales at a loss in order to maintain throughput. These can be costly and cashflow inefficient. At Newport we chose to use the LME steel derivatives to manage the price risk of our entire inventory. The primary benefit is that it allows us to be active in the market all year-round, buying and selling regardless of price levels. At the same time, we are able to trade around our core position, across the term structure of LME futures and be rewarded for holding material during contango market conditions.

How does it feel to have won the LME-sponsored ISTA Steel Derivatives Trader Award?

It feels fantastic to have won the award and be recognised among the steel community for my achievements. Although, I still view this as very much a team effort. None of it would have been possible without the incredible support from the team at Anglo, so a deep thank you to all of them.      

How do you see yourself progressing in your career following your award win?

I would like this achievement to act as a springboard for further career progression and open the door to new connections and business opportunities. There is still much for me to learn, particularly on the processing and steel making side of things. One thing is for sure, I really enjoy working in steel trading with its unique set of challenges, and where every day proves to be a learning opportunity. I highly recommend it as an exciting career path to aspiring young professionals. 

What big themes do you see for steel markets in 2025?

One of the most obvious has to be the return of Trump to the White House and the impact of his protectionist policies on trade in steel and related industries. This seems likely to be further compounded by possible retaliatory measures and their effects. Additionally, it remains uncertain whether China can stabilise its housing market, a key driver of steel demand. In other regions, fears of a resurgence in inflation could lead to higher borrowing costs and market instability. Overall, in steel anything is possible, from port strikes to natural disasters, all causing major disruptions. I feel we are going to see hyper price volatility in 2025.