HRC Futures: Markets Fairly Volatile

However, market participants assessed the ore supply situation to be not as constrained as feared. The subsequent selling pressure brought the prices in the ore market down.

Meanwhile, the scrap market has remained well bid for the deep sea cargoes as Turkey’s appetite for scrap has picked up. Worsening weather conditions in the U.S. has meant that price sentiment on scrap has picked up. This is reflected in the near term for both the Turkish scrap curve as well as the Busheling scrap. A combination of higher scrap pricing and ~$88/mt for Iron Ore Fe 62% is leading pig iron exporters to also consider raising prices higher. 

All the above factors have translated into the U.S. HRC market trading up on the front months as participants anticipate short-term tightness with stronger international markets, lower U.S. imports and an improved raw material outlook.

The key flags to watch out for in the coming days will be mill lead times on finished products, pace of imports and sentiment in China. Of the aforementioned, I’d identify mill lead times as a key measure that many in the futures market are watching like a hawk. Any pickup in order activity at the mills is likely to show up via promise dates from the mills as well as their resulting reluctance to negotiate on price.

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