Futures
HR futures: Activity muted amid quiet spot market
Written by Mark Novakovich
April 25, 2024
Week-over-week trading activity in US steel derivatives markets was relatively muted, with prices maintaining their downward direction since the beginning of the month.
Bids have materialized at the lower end of this range in the May, as the nearby backwardation continues to roll on – just as we saw with April being a premium over May.
There are fewer sellers appearing up front, however, while June simultaneously comes under pressure as the sell-side interest deepens there.
The May 24 CME HRC closed lower from last Thursday provisionally by $7 per short ton (st) at $812/st on April 25, and was down nearly 13% on the month.
Open interest in the CME HRC dropped following the expiration of the April contract, which settled at $841/st. Daily trade volumes were also below recent averages, and down notably from Q1’24.
A sideways CRU print did little to inform or guide the market in either direction. The weekly Nucor offer number provides some additional price transparency. But the market appears unsure of how to digest the information.
Many commercial participants remain sidelined with little appetite on longer term positioning, while financial interests are primarily on the offer side of the market. Scrap paper activity has been especially quiet as well, and physical scrap participants have also cited a quiet spot market. But some are expecting activity to pick up in coming weeks.
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 should not be treated as a specific inducement to make a particular investment or follow a particular strategy. Views and forecasts expressed are as of date indicated. They 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.
Mark Novakovich
Read more from Mark NovakovichLatest 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. […]