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.

Disclaimer: The content of this article is for informational purposes only. The views in this article do not represent financial services or advice. Any opinion expressed by Crunch Risk, LLC should not be treated as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Views and forecasts expressed are as of date indicated, are subject to change without notice, may not come to be and do not represent a recommendation or offer of any particular security, strategy or investment. Strategies mentioned may not be suitable for you. You must make an independent decision regarding investments or strategies mentioned in this article. It is recommended you consider your own particular circumstances and seek the advice from a financial professional before taking action in financial markets.

Jakc Marshall, SMU Contrubutor

Jack Marshall

Jack Marshall has over 30 years of experience trading and marketing financial futures and swaps, including currencies. Before joining Crunch Risk in 2012, Marshall was responsible for Forex Origination for BofA Merrill Lynch in their Chicago office. For Crunch Risk, he focuses on Ferrous scrap futures and helps manage client communications. Marshall is a regular contributor to the Steel Market Update newsletter covering topics including steel and steel scrap futures. He is NFA registered Associated Person and holds a Series 3 license. Marshall can be reached at jack.marshall@crunchrisk.com.

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