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
Nearby HR futures pull back as 2024 nears end
After experiencing a rally ahead of the 2024 election, the nearby part of CME HRC futures complex has softened as we approach year-end. Meanwhile, the forward positions (second half of 2025) have remained supported and largely unchanged.
HRC Futures: Here comes Trump bump 2.0?
No more excuses! The election is over. Donald Trump will be inaugurated on Monday January 20 with the Republican party in control of Congress. Now, it is time to get back to work!
HR Futures: Which way following election?
Since June, The US hot-rolled coil (HRC) futures market has been in a rare period of prolonged price stability, closely mirroring the subdued volatility seen in the physical market. Over the past five months, futures have been rangebound, with prices oscillating between a floor near $680 and a ceiling around $800. This tight range, highlighted in the chart, underscores a cautious market environment. The chart below shows the rolling 3rd month CME HRC Future.
HR futures: Support fails as market slows ahead of election
After a relatively stable and boring September, CME hot-rolled coil (HRC) futures have been on the move lower thus far in October. Since Sept. 30, the November and December futures have declined $63 and $65, respectively, with the curve’s contango steepening.
CRU: Open interest in December HR futures contract surges
CRU Principal Analyst Josh Spoores shares insight into the hot-rolled coil futures market.