Futures
Ferrous Futures: Treading Water This Summer
Written by Jack Marshall
July 28, 2022
The following article on the hot-rolled coil (HRC), scrap and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:
Hot Rolled
The HR futures market has been somewhat subdued this month, which is reflected in the price changes for July.
Over the last four Wednesdays, spot has declined $127 per short ton—from $988/ton to $861/ton—to settle at an average of $922/ton.
Continued inflation concerns and another 75-basis-point hike by the Federal Reserve have weighed on activity.
Meanwhile, the futures curve has changed little this month, with the latter half months of 2022 down roughly $25/ton to an $870/ton average.
Q1’23 is basically unchanged at $895/ton, and the latter part of the futures curve is up roughly $25/ton.
The bulk of trading has been in 2022 months. But there has been a small pickup in Cal’23 periods this week. That could be signaling a change as folks look to hedge out further interests.
Also, a few Q4’22 HR call options have traded recently with strikes in the low $900/ton range.
Open interest, which closed out June just shy of 30,000 lots, currently sits at 27,300 lots—reflecting the quieter markets.
Trading volumes are running at an average volume of 15,000/ton per day this month, which has 18 trading days.
Below is a graph showing the history of the CME Group 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 us at info@SteelMarketUpdate.com.
Scrap
BUS declined from $635 per gross ton in Jun’22 to $501/gross ton for the Jul’22 settlement. It has continued to show some further weakness this month, with Aug’22 futures trading as low as $460/gross ton after sitting at $475/ton for a few weeks.
Since the end of June, the latter half of 2022 average settlement price has declined from $495/gross ton to roughly $470/gross ton currently. With prices under $500/gross ton, we are starting to see more BUS inquiries.
Below is another graph showing the history of the CME Group 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.
By Jack Marshall of Crunch Risk LLC
Jack Marshall
Read more from Jack MarshallLatest in Futures
HR Futures: Market at crossroads after turbulent run
The market appears to be pausing after a turbulent run. But tension remains just beneath the surface. With net long positioning still elevated, sentiment-driven selling could quickly reignite volatility. Still, supply constraints and limited imports are laying the groundwork for a resilient physical market. This moment of calm feels more like a crossroads than a conclusion.
HR Futures: Traders’ views mixed as market navigates tariffs
A look at the HR futures market.
Market pressures trigger HR futures reversal
Market dynamics are shifting rapidly, with futures pricing diverging from physical fundamentals, creating a complex landscape for steel traders.
HR Futures: Correction in market after big rally
Another eventful week in the physical and financial steel markets is coming to a close, but with a markedly different tone than the last update at the end of February.
HR Futures: Market drifts lower on light volume
Over the past couple of weeks, Midwest HRC futures have been drifting lower on light volume. This begs the question if the rally has run out of steam, or is it catching its breath after ripping roughly $150 in less than two weeks? The April CME Midwest HRC future made an intraday high at $976 […]