Futures

Hot Rolled Futures: Quiet Week
Written by Jack Marshall
June 23, 2016
The following article on the hot rolled coil (HRC), busheling scrap (BUS), and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how they saw trading over the past week:
Hot Rolled Coil (HRC)
With spot hot rolled (HR) hovering around the $630 per short ton (ST), HR futures interests have been focused primarily on the Q4’16 period this past week. Exchange cleared volume represented 15,000 ST at a rough average price of $545/ST, basically unchanged from last week. Buyers have been relatively scarce this week in most periods and the lighter activity suggests we have entered summer markets.
Participants have been reticent to act without stronger signals on 2H’16 market direction especially given that spot turned this past week. The markets will surely be focused on next week’s reported spot transactions to get a better read on whether they can take advantage of the current shape of the futures curve.
HR futures open interest rose from 21,390 contracts to 21,990 contracts or 439,800 ST.
Below is a graphic of the HRC Futures Forward Curve. The interactive capabilities of the graph can only be used in Steel Market Update website here. If you have any issues logging in or navigating the website please contact us at info@steelmarketupdate.com or (800) 432 3475.
Scrap
Early market talk suggests obsolete grades will probably be off $10to$20/GT. While market chatter for busheling scrap (BUS) is firm due to tight mid-summer supply. The current futures curve as reflected in bid/offer interests reflect a modest discount to spot. In BUS futures curve we are seeing 2H’16 BUS $250 bid/$260 offered per GT. Last week 1H’17 BUS traded @ $257/GT. This week 1H’17 $250 bid.
The spread between HR and BUS is fairly well discounted in future months as you can see in the table below , however when compared to historic levels it is still quite high.
LME Steel Scrap sees lower levels again this week. Wednesday TSI reported benchmark for CFR at $220/MT. In spite of talk that Chinese rebates for billet might be removed which could lead to a reverse in scrap demand, Q3’16 CFR remains just north of $200/MT. Not sure what reverses the bearish market sentiment and the backward sloping futures curve.
Another graphic is below, but of the BUS Futures Forward Curve.

Jack Marshall
Read more from Jack MarshallLatest in Futures

HR Futures: Correction in market after big rally
Another eventful week in the physical and financial steel markets is coming to a close, but with a markedly different tone than the last update at the end of February.

HR Futures: Market drifts lower on light volume
Over the past couple of weeks, Midwest HRC futures have been drifting lower on light volume. This begs the question if the rally has run out of steam, or is it catching its breath after ripping roughly $150 in less than two weeks? The April CME Midwest HRC future made an intraday high at $976 […]

HR Futures: Uncertainty hangs over the steel market
Uncertainty has remained a dominant theme in the US ferrous derivatives markets over the past month. And the Trump administration's tariffs on steel and aluminum are still top of mind for market participants.

HR Futures: Major trade developments lift the ferrous complex
Headline risk has returned to the ferrous complex, with both hot-rolled coil (HRC) and busheling ferrous scrap (BCH) markets surging in response to fresh trade restrictions.

HR Futures: Midwest ferrous futures consolidate gains, market anxiously awaits next move
Four weeks have passed since the last article from Rock Trading Advisors on January 30. The paint has dried, and Midwest HRC futures have exploded higher in response to President Trump’s declaration of impending 25% tariffs on all imported steel products. The rolling 2nd month CME Midwest HRC future erupted through the top end of its downtrend, one that dates back to the peak of the winter 2022 rally. It also broke out of its narrow range seen dating back to June of last year.