Hot Rolled Futures: Active Week Despite MLK Day

It has been an active week even with the CME closed for Martin Luther King Day.  This past week we have seen HR futures give back some of their recent gains primarily due to retreating LME  futures scrap prices and reduced cargoes.

Friday was particularly active especially in the April/December 2017 HR future as it traded at $608/ST[$30.40/cwt] in 1,620 ST per month. Q2’17 HR was also very busy as it traded from $612/ST[$30.60/cwt] to $606/ST[$30.30/cwt]with slightly over 6,000 ST per month changing hands.  March/May  2017 traded @ $615/ST[$30.75/cwt].   We had increased HR offer interest as the day progressed.

Tuesday and Wednesday we saw further selling interest along the middle of the curve  as Q2+Q3’17 traded 1,600 ST per month with the price moving from $606/ST[$30.30/cwt] average to $604/ST[$30.20/cwt] average.   Some of the additional selling interest probably was on the back of the small ,week on week, increase in the index that the CME uses for its HR contract.

Buying interest has been thinning most of this week as more indicators point to weaker supply constraints.  There is concern that  a slow down in scrap exports has removed the upward price pressure in HR.

Today the Q2/Q3’17 period traded even lower, as Q2’17 traded at $600/ST [$30.00/cwt] .  Also the May/Sep’17 HR traded at $598/ST[$29.90/cwt]  as one leg of a scrap to steel spread in decent size.

This week 59,960 ST traded leaving  Open Interest of 13,333 contracts or 266,660 ST.

Below is a graph showing the history of the hot rolled futures forward curve. You will need to view the graph on our website to use its interactive features, you can do so by clicking here. If you need assistance with either logging in or navigating the website, please contact our office at 800-432-3475 or info@SteelMarketUpdate.com.

Scrap

With spot last trading at $283/MT LME scrap has been looking at bit softer.  Lack of export cargoes in January is causing some discomfort.  Today Q2’17 SC traded at $275/MT and Q3’17 SC traded at $278/MT on decent size.  We have  seen an uptick in activity with extra liquidity coming from interest the  wide HR/SC price spread.

BUS futures have been easing along with HMS futures.  Current selling interests in Q2’17 and 2H’17 have moved below $300/GT for the first time in a couple of weeks.  Market will focus on the strength of offshore scrap shipments to gauge whether supply tightness returns to BUS.  Current concern is that extra offshore bound scrap finds it way into Mid-west supply chain.

Below is another graph showing the history of the busheling scrap futures forward curve. You will need to view the graph on our website to use its interactive features, you can do so by clicking here. If you need assistance with either logging in or navigating the website, please contact our office at 800-432-3475 or info@SteelMarketUpdate.com.