Futures
Hot Rolled Futures: China Meltdown
Written by Andre Marshall
May 1, 2014
This article is part of a longer article first published on Thursday, May 1st and is written by Andre Marshall, CEO of Crunchrisk, LLC and our Managing Price Risk II instructor:
Steel
It was a fairly quiet week in futures with 400 lots or 8,000 ST trading most of yesterday on the July date. The nearby months of May/June are less well bid than the highs by about $7-10/ST. However, in the last few days July and Aug have increased by about $7/ST, so it looks like nearby hedging is moving out the curve a bit. The balance of the year continues to be offered either side of $635. Buyers are about $5/ST below offers in the current environment. The CRU came in $683/ST or $4/ST higher. We seem to have a plateau in futures which appears to be mirroring a similar plateau in spot, at least for now.
Iron Ore
A real meltdown in China. Can’t say it wasn’t expected at some point, but Iron Ore dropped $5/MT in a day, or 4.5%! Chinese trade houses liquidated length on the back of economic data, poor housing sales, and new rules around margins required for LOC’s for financing of inventory. This relates to the finance schemes to lower borrowing rates that I have been referring to. We were $105/MT on Wednesday close but, due to the Singapore holiday, Iron Ore did not trade on the index or futures today, so tomorrow could bring more fireworks. For now, the price suggests that the marginal cost of the Chinese producers is not relevant to the current supply fundamentals and high port stocks. Let’s call June $104/MT, July $103/MT, Aug $102.25/MT, Q4 $101.25/MT, and Cal ’15 $100.25/MT.
Scrap
CFR Turkey continues to be under pressure–down again a dollar today to $375/MT. Continued lack of Chinese long product demand and difficult exports are the culprit. Lack of east coast activity on our shores continues to weigh on the domestic market. Depending on the region, we are hearing sideways to down, mostly with East Coast under greatest pressure and Chicago/Mid West under least, with Mini’s having picked up order from the BOF supply disruptions. Looks like Midwest may still come in down $10/GT by the time we are done.
Andre Marshall
Read more from Andre MarshallLatest in Futures
HR Futures: Meaningful rally grips market
Another eventful week in the physical and financial steel markets is coming to a close. Most importantly, this week provided complete clarity that, after months of waiting for a catalyst, we are now definitively in the early stages of a meaningful rally. The 3rd month future (currently the April contract) rose more than 8% for […]
HRC and scrap futures: Markets pop on hot steel and tariff headlines
It’s been an event-filled month in US ferrous derivatives markets since my last column for SMU. There’s been no shortage of writings and musing about the ongoing steel and aluminum tariffs proposed by the Trump administration. And steel and scrap futures markets have responded accordingly. CME HRC futures prices have risen, and the curve has firmed. The February 2025 HRC futures contract, now in the pricing period, has added $47 per short ton (st) since its contact lows on Jan. 20 to settle at $767/st today.
HR Futures: What’s next for HRC and busheling prices?
Since the publication of our last market update on Dec. 10, several notable developments have shaped the landscape
HR Futures: Awaiting Trump’s 25% tariff
Midwest HRC indices have been stuck in a tight range since last summer with the weekly CRU Midwest HRC price spending the past 32 weeks between $656 and $714 per short ton (st). The rolling Midwest HRC future has been rangebound between roughly $650 to $800 since last June. The rate at which the price of HRC futures move over a certain period or “volatility” has compressed dramatically over the past few months.
HR Futures: Market coiled and ready to move in 2025?
The last six months have been littered with uncertainty and mixed signals, a choppy and rangebound market. Spot indices have largely held steady, despite the pressure from domestic mills pushing for higher prices on spot tons. This has provided a signal of a lack of upward momentum and little downside room based on mill costs. […]