Volatility in the steel industry is nothing new, but price cycles have grown more extreme. Competitive prices for buyers and sellers change more frequently. Lagging data can cause distortions in volatile markets.
While less frequent assessing might seem to even out the cyclical nature of steel pricing, in fact, daily monitoring yields a more consistent outcome and helps ensure the most up-to-date snapshot of a market. Platts US benchmark steel prices, such as hot-rolled coil, are assessed by S&P Global Commodity Insights on a daily basis.
Daily data points lead to a more robust monthly average, with less weight given to a single day compared with a weekly approach that includes only four or five prints per month. In many cases, monthly averages are used as the basis for settlement of derivatives contracts.
Even when markets lack liquidity, commodities still have value. This is evident in exchange-traded markets where even if there is no trading taking place, there is still a value for the commodity published each day. Financial requirements are such that many companies need to be able to mark to market their inventories or positions every day, as well.