Futures
Hot Rolled Steel and Scrap Futures: Market's Hopping
Written by Jack Marshall
March 8, 2018
The following article on the hot rolled coil (HRC) steel and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:
Steel
HR futures prices have moved up. POTUS has been keeping the HR futures market hopping this week. The plethora of news releases on steel tariffs has kept the ferrous market off balance. Q2’18 HR futures traded at $872/ST on a weighted average price basis today, $10/ST above where we traded this past Friday ($862/ST). Q3’18 HR futures traded at $856/ST on a weighted average price basis today, $9/ST above where we traded this past Friday ($847/ST). Q4’18 HR futures traded at $852/ST on a weighted average price basis today, $40/ST above where we traded this past Friday ($812/ST). Also of note, 1H’19 traded here today at $850/ST.
The slope of the backwardation has become much less steep in the last few days as participants paid up the latter half of 2018 and the 1H’19 on the expectation of higher prices due to more constrained imports.
HR futures trade volume including last Friday through today has been pretty heavy with over 86,500 ST trading, of which 25,000 ST traded today.
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 Brett at 706-216-2140 or Brett@SteelMarketUpdate.com.
Scrap
BUS futures have traded in a narrow range this week. Q2’18 has been trading $420-$425/GT in light trading. Participants are waiting for the March BUS settlement. Market sentiment is that it will be sideways to $5-$10 higher. HMS 80/20 scrap futures (SC) prices have retreated as Turkish importers slow purchases, and also on the back of weaker ferrous prices in Asia. Q2’18 SC prices have dropped about $15/MT since last Friday. They are currently around $377/MT.
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.
Jack Marshall
Read more from Jack MarshallLatest in Futures
HR Futures: Meaningful rally grips market
Another eventful week in the physical and financial steel markets is coming to a close. Most importantly, this week provided complete clarity that, after months of waiting for a catalyst, we are now definitively in the early stages of a meaningful rally. The 3rd month future (currently the April contract) rose more than 8% for […]
HRC and scrap futures: Markets pop on hot steel and tariff headlines
It’s been an event-filled month in US ferrous derivatives markets since my last column for SMU. There’s been no shortage of writings and musing about the ongoing steel and aluminum tariffs proposed by the Trump administration. And steel and scrap futures markets have responded accordingly. CME HRC futures prices have risen, and the curve has firmed. The February 2025 HRC futures contract, now in the pricing period, has added $47 per short ton (st) since its contact lows on Jan. 20 to settle at $767/st today.
HR Futures: What’s next for HRC and busheling prices?
Since the publication of our last market update on Dec. 10, several notable developments have shaped the landscape
HR Futures: Awaiting Trump’s 25% tariff
Midwest HRC indices have been stuck in a tight range since last summer with the weekly CRU Midwest HRC price spending the past 32 weeks between $656 and $714 per short ton (st). The rolling Midwest HRC future has been rangebound between roughly $650 to $800 since last June. The rate at which the price of HRC futures move over a certain period or “volatility” has compressed dramatically over the past few months.
HR Futures: Market coiled and ready to move in 2025?
The last six months have been littered with uncertainty and mixed signals, a choppy and rangebound market. Spot indices have largely held steady, despite the pressure from domestic mills pushing for higher prices on spot tons. This has provided a signal of a lack of upward momentum and little downside room based on mill costs. […]