Futures

Hot Rolled Futures: Prices Breakdown…

Written by Bradley Clark

May 22, 2014

The past couple of weeks have been a bit brutal for the US hot rolled coil (HRC) forward curve. While the spot market is appearing to run out of steam the HRC forward curve has broken down particularly the second half 2014 periods and calendar 2015 periods.  May and June have withstood this recent selling onslaught maintaining recent trading ranges of $675-$685.  Q3 and Q4 have not fared as well having traded down to a low of $625, Q4 $623 and cal 15 $625.

It must be said  that while softening raw material prices for domestic scrap and global iron ore have taken a hit the past month, in order for calendar 2015 to trade much lower a would take a structural breakdown in the domestic US HR market.  That occurrence seems quite unlikely given the potential for further domestic production consolidation, strengthening US economy and geopolitical upheaval taking out a major foreign source of HRC into the US. 

On top of that the HRC futures market tends to go into a strong contango when spot prices soften, so even if a collapse in the price of steel over the next few months is imminent that does not necessarily mean that 2015 periods will soften much further. In fact, $620 level has been a technical support level for several years.

Volumes have been decent over the past few weeks with over 10,000 tons trading, primarily focused on more deferred periods in cal 15.

In the space below is one of our interactive graphics depicting the HRC forward curve. The graphic can only be seen when you are logged into the website and reading the newsletter or this article from there. If you need assistance getting into the members only section of the website please contact us at: info@SteelMarketUpdate.com or by phone: 800-432-3475 and we will help you.

{amchart id=”73″ HRC Futures Forward Curve}

U.S. Midwest #1 Busheling Ferrous Scrap (AMM) Market Remains Quiet

The scrap market remained quite this week as the middle of the months rarely gives much insight as to where prices are headed. With global raw materials softening, scrap may be in for another sideways to softer month in June.  On the futures side more bids are around particularly 4th quarter periods at $385 and calendar year 15 periods at $405.  It seems that recent support at $385 will hold for the foreseeable future. No trades have been reported lately.

The BUS (busheling scrap) forward curve interactive graphic is located below but can only been seen when reading the newsletter/article on our website

{amchart id=”74″ BUS Futures Forward Curve}

Bradley Clark

Read more from Bradley Clark

Latest in Futures

HR Futures: Which way following election?

Since June, The US hot-rolled coil (HRC) futures market has been in a rare period of prolonged price stability, closely mirroring the subdued volatility seen in the physical market. Over the past five months, futures have been rangebound, with prices oscillating between a floor near $680 and a ceiling around $800. This tight range, highlighted in the chart, underscores a cautious market environment. The chart below shows the rolling 3rd month CME HRC Future.