Futures
HRC futures: Momentum picking up on HR spot price declines
Written by Jack Marshall
February 8, 2024
After holding steady for most of January, the hot rolled (HR) index has started to gain some downward momentum. In the last 30 days, it has declined $89 per short ton (st) and is sitting just above $1,000/st.
A steep backwardation in the nearby end of the HR futures curve points to an expectation of an acceleration of the price declines. On Thursday, Feb’24 future settled at $945/st vs. an Apr’24 settle at $811/st, a healthy $134 discount.
One month ago that discount, based on Jan. 10 settles, was just $96/st.
Also worth noting, the latest Apr’24 HR settlement is still just over a $100/st over the Aug-Sep’23 index low of $702/st. Technical support will provide some resistance, but real demand and actual inventory need will determine the trend.
The pickup in momentum could be a sign transaction volumes are increasing as price discounting by mills of HR helps move inventory. Steep interest rates, which are unlikely to soften before the next quarter, appear to have suppressed physical volumes as service centers manage higher financing costs and less leverage. Imports likely also will help accelerate discounts. The April-to-December 2024 futures price curve is sitting in the mid-$830/st range as an average.
Prime busheling (BUS) scrap, which had surprised in January with settle at $518.10—only off slightly from December—appears poised to decline between $35 and $45 per gross ton (gt) for February. The balance of 2024 months for BUS fall between $455 and $475/gt based on Thursday’s settlement, with March-May trading at $460 for some volumes. The Feb-through-June’24 curve has dropped about an average of $20/gt, with the latter half giving up less than $10/gt.
Jack Marshall
Read more from Jack MarshallLatest in Futures
HR Futures: Meaningful rally grips market
Another eventful week in the physical and financial steel markets is coming to a close. Most importantly, this week provided complete clarity that, after months of waiting for a catalyst, we are now definitively in the early stages of a meaningful rally. The 3rd month future (currently the April contract) rose more than 8% for […]
HRC and scrap futures: Markets pop on hot steel and tariff headlines
It’s been an event-filled month in US ferrous derivatives markets since my last column for SMU. There’s been no shortage of writings and musing about the ongoing steel and aluminum tariffs proposed by the Trump administration. And steel and scrap futures markets have responded accordingly. CME HRC futures prices have risen, and the curve has firmed. The February 2025 HRC futures contract, now in the pricing period, has added $47 per short ton (st) since its contact lows on Jan. 20 to settle at $767/st today.
HR Futures: What’s next for HRC and busheling prices?
Since the publication of our last market update on Dec. 10, several notable developments have shaped the landscape
HR Futures: Awaiting Trump’s 25% tariff
Midwest HRC indices have been stuck in a tight range since last summer with the weekly CRU Midwest HRC price spending the past 32 weeks between $656 and $714 per short ton (st). The rolling Midwest HRC future has been rangebound between roughly $650 to $800 since last June. The rate at which the price of HRC futures move over a certain period or “volatility” has compressed dramatically over the past few months.
HR Futures: Market coiled and ready to move in 2025?
The last six months have been littered with uncertainty and mixed signals, a choppy and rangebound market. Spot indices have largely held steady, despite the pressure from domestic mills pushing for higher prices on spot tons. This has provided a signal of a lack of upward momentum and little downside room based on mill costs. […]