Steel Products
HRC Futures: Uneven Trading Before the Storm
Written by Jack Marshall
September 7, 2023
The hot rolled (HR) forward curve has rebounded following the Labor Day weekend. The index this week surprised a few folks as it barely slid double figures and remains above $750 per short ton (ST). Lots of rumored lower prices for larger volume deals did not get reflected in the index. While the markets remain somewhat more muted with the looming United Auto Workers (UAW) deadline, futures volumes have begun to pick up this week as some hedgers took advantage of the lower futures prices.
October futures traded as low as $675/ST before retracing back above $700/ST. Forecast difficulty remains an issue and is reflected in lower open interest in the longer dated months: 85% of the open interest falls in nearby six months. Q4’23 HR and Q1’24 HR quarters have been more active as folks position around the turn. On a settlement basis, Q4’23 dropped to $706/ST on Sept. 5 and settled today at $734/ST, reflecting the sentiment shift. Next week should be more active with the deadline met.
BUS futures have been under some selling pressure this last week, with the front month trading last at $430/GT. Initial expectations for the Sep’23 BUS settle was down $20 per gross ton (GT), but further selling interest has left the market down an additional $15/GT. At these lower levels we are seeing more inquiries on the buy side. We will have to see what a possible UAW strike does to the supply/demand. Presumably, the stampers have been active as the auto manufacturers have been preparing for a possible interruption.
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Jack Marshall
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