Hot Rolled Futures: Global Markets Fail

We had a modest 464 lots trade in this holiday 4 day week (through May 29th), which really was a 3 day week with most people mentally out Friday and out Monday. That’s 8480 short tons for the week. The market has met a floor for now at the $623-625 zone pretty much August 2014 on. June and July are also under pressure and would reflect it if a decent bid were to materialize. Most of the activity has been in the Q3/Q4/Q1 periods. We are about $12/ST below where we were two weeks back on Q3 and a $3-4/ST below on Q4. The CRU came in at $683/ST down another $2/ST.  Market softer, but not because of any deals happening yet.

The following is the SMU interactive graph for hot rolled futures. The graph can only be seen when reading the newsletter on the SMU website. Otherwise, it is just white space between this and the comments about iron ore. If you need help learning how to use our interactive graphics please contact Brett in our office: Brett@SteelMarketUpdate.com or 800-432-3475.

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

Iron Ore:

Is sick! Just no other way to state it. We are last $95.70/Metric Ton on the spot index and the forward, albeit flat, is a miserable $95/MT pretty much out though 2015. The market you might recall was $107/MT on the rebound rally which initially dropped to $98/MT zone to rally back to a $100/MT and now down to $95/MT. The fact that the backwardation has dissipated as the front end has dropped suggests that $95/MT could be the new normal mean revert. Some are expecting the front end to drop to $85/MT before it’s done. The Chinese economic data of late has been poor with housing sales dropping 7.7% in the first quarter, and auto sales growth dropping to a 7.7% rate versus last year’s 11% rate. Concerns over China’s exports levels have added to the concern. We literally are either side of $95/MT all the way through June 2015, from there through Dec ’15 we are just below $95.50/MT with Q1 ’16 at $97.25/MT and Q2/Q3/Q4 ’16 at $98.00/MT.

Scrap:

Although shred came off somewhat for May, Busheling really was sideways at down $2/Gross Ton, and for June expectations are for lower, whether you are in the down $10/GT or down $25/GT camp. Probably again a little bit worse for Shred than for Bush.  Probably looking at $365-$380/GT basis Bush depending on region and where mini’s (EAF mills) are on inventory. Meanwhile, exports off East coast to Turkey have been ok and held in the $370-375/MT CFR Turkey basis. BUS and CFR Turkey scrap are essentially offered on futures just below spot levels.

Below is another one of those pesky interactive charts. Ditto what was mentioned just prior to the HRC Futures graphic above.

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