HR Futures: Activity picks up to start 2025

Meanwhile, the December 2025 HRZ5 contract is lower by $15/st since the election, settling at $800/st on Friday. That’s down from $815/st seen on Nov. 7. (A chart showing the prompt vs. December HRC futures spread is below.)

Contango

Thus, the contango market structure we saw for most of 2024 continues to march on, with no catalyst in sight to alter the dynamic. Few market participants are willing to sell material volumes on the back-end of the curve amid uncertainty regarding President-elect Trump’s tariff policies.

Relatively short lead times for spot tons, around 4-6 weeks, are weighing on the front of the market though, and both CRU and SMU physical indexes are below $700/st.

Notably, a large short position has been building in the June 25 HRC contract, with approx. 3,700 lots of open interest built in that period, or nearly 15% of total open interest. It’s somewhat unusual for a forward contract month to hold such are large portion of open interest. Some market participants presume this position to be held by the same trader who shorted December 24 HRC for large volumes earlier last year.

Total open interest in the HRC futures complex stands at 540,000 st, down by a little more than 100,000 st since last month. Daily traded volumes have also been on the low side, with the market failing to eclipse 40,000 st daily volume since Dec. 13.

New busheling contract

The CME’s Chicago No.1 busheling contract (BCH) launched in December 2024. It has seen some scrap market participants return to the futures market. While there’s some lingering interest in the MW Index busheling contract (BUS), as the contract remains live through the end of the 2025, liquidity appears to be migrating over to the new Chicago number. An options contract (CHX) on the Chicago busheling, a first for scrap futures, will launch in February 2025.

January-December HRC contango

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