Futures
Hot Rolled Futures: Quiet Week
Written by Jack Marshall
July 14, 2016
The following article on the hot rolled coil (HRC), busheling scrap (BUS), and financial futures markets was written by Andre Marshall and Jack Marshall of Crunch Risk LLC. Here is how they saw trading over the past week:
It has been a quiet week in Hot Rolled futures (HRC) with 13,380 short tons (ST) trading.Until today the last HR trade was executed last Friday. Q4’16 traded at $545/ST[$27.25/cwt] on 2,000 ST per month.
The focus this week has been on Cal’17 which has been basically $520/$525 ST, however we have not had many trades cross as buyers have been fading the market while offers held steady at levels just above last week’s trade price [$522/ST]. That changed today as buyers came back in and Q1’17 traded at $533/ST[$26.65/cwt] in 1000 ST per month and Q2’17 traded at $527/ST[$26.35/cwt] in 500 ST per month. So the 1H’17 traded today at a weighted average of $531/ST.
Now market offers in Cal’17 have backed up at least $5/ST due to increased buying inquiries and the offers in Q4’16 have also backed up from levels seen earlier this week ($550/ST). It is interesting that a drop in spot prices and a drop in lead times this past week has been matched by a reduction in the forward discount to HR spot prices.
Scrap
Rising iron ore prices and billet prices appear to have slowed the decline in CFR Turkish scrap prices. Market chatter would suggest a base is forming in CFR Turkish scrap. We have had more bid interests coming in this week which could support the talk. Last price trading around $213/MT.
In BUS prices (busheling scrap on CME) for spot were pretty much sideways again ($274/GT). BUS futures are slightly discounted with Aug’16 through Oct’17 $250/GT bid and Q4’16 and 1H’17 offered at $260/GT and $265/GT respectively. 1H’17 last traded at $257/GT.
Notice the metal margin spread for Q4’16 is at $285, ($545 bid Q416 HR and $260 offer Q4’16 BUS). 1H’17 is at $265, ($530 bid 1H’17 HR and $265 offer 1H’17 BUS)
Jack Marshall
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