The art and science of Midwest Duty-Paid Premium discovery

The imposition of the 50% tariff under Section 232 sent everyone to their calculators to determine what the replacement value of Midwest duty paid premiums “ought to be “. The author was no exception. Let’s start though by being clear about what replacement value represents.

Any trader worth his/her salt is trained to adhere to the principle of replacement value when managing their risk position in outright price or premium position. You need to know the replacement cost of what you are selling today. You also need to understand how that replacement cost will impact the position you DON’T sell today.