Futures

CRU: Open interest in December HR futures contract surges

Written by Josh Spoores

October 11, 2024

Price changes in the HR coil futures market have been minimal in the past month with values recorded on Monday, Oct. 7, near steady with our Sept. 9 analysis. This lack of change in the futures market is not surprising given the relative stability in physical prices over the past four weeks.

What has changed in the futures market has been a 10% rise in open interest, with a substantial increase in the December 2024 contract. Open interest is the number of 20-st contracts active in the market, representing both a buyer and seller. As of this past Monday, there were just over 24,000 contracts, representing nearly 500,000 st of volume. The December contract alone stood at 7,375 contracts or just over 30% of all open interest. In reviewing this futures data over the past several years, the most visible increase of open interest has come at times before futures prices associated with this volume fell.

As of Oct. 7, the December contract was priced at $772/st, nearly steady with the price in early August. However, open interest has jumped by 72%. While mills continue to target prices near the mid-$750/st level, we have recently seen a return of competition in the physical market, likely due to the temporary outages ending while new capacity continues to ramp up. The value associated with the December contract bears watching as does the full 2025 forward curve, particularly as the upcoming US election unfolds over the next four weeks.

Learn more about CRU’s services at www.crugroup.com.

Josh Spoores

Josh Spoores joined CRU in 2012 as Principal Analyst and editor of CRU’s Steel Sheet Monitor and Steel Sheet Market Outlook. During that time, Mr. Spoores forecast prices, demand, production and trade of sheet and plate products for both Canada and the US for CRU's Steel Sheet & Plate Market Outlooks. Today, he heads up steel analysis and forecasting for the Americas region. Prior to joining CRU, he was a Senior Marketing Analyst at Severstal North America, founder of Steel Reality, a forward-looking market analysis firm using a models-based approach for flat rolled and plate steel. He was also the Market Research Manager at Majestic Steel USA, one of the largest flat rolled service centres in the USA. He has a BSc in Business Administration from Bowling Green State University.

Read more from Josh Spoores

Latest in Futures

HR Futures: Which way following election?

Since June, The US hot-rolled coil (HRC) futures market has been in a rare period of prolonged price stability, closely mirroring the subdued volatility seen in the physical market. Over the past five months, futures have been rangebound, with prices oscillating between a floor near $680 and a ceiling around $800. This tight range, highlighted in the chart, underscores a cautious market environment. The chart below shows the rolling 3rd month CME HRC Future.