HRC and scrap futures: Markets pop on hot steel and tariff headlines

And steel and scrap futures markets have responded accordingly.

HRC futures

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 contract lows on Jan. 20 to settle at $767/st today.

Meanwhile, the March 2025 HRC has added more than $110/st since contract lows seen on Dec. 11 to settle at $856/st today. That’s correct: Contract lows for the March 2025 futures were seen just eight weeks ago.

The dramatic rally in March and forward futures positions reflect the one-month delay in tariffs previously announced at the of January. It also reflects the notion that administration is committed to enacting them.

Additionally, it’s well known at this point that mills have been raising their posted prices and are holding firm on pricing for spot physical tonnage. So, we’ve got mill price increases, looming tariffs, and cautiously optimistic demand from service centers. That has served to shift the momentum in the market to a noticeably bullish stance. The shape of the curve structure also indicates such.

While previously noting the trudging contango futures curve for most of 2024, the carry structure has virtually vanished. Some traders are even positioning for a backwardation structure.

The chart below shows the relationship between the March 2025 and the December 2025 futures contract. (You can click on it to expand it.) It illustrates the spread moving from a $70/st carry as of mid-December 2024 to settling virtually flat as of this writing. In fact, in today’s block market, a sizeable trade was placed valuing 2Q25 at an $8/st premium to 4Q25.

New market participants are thought to have entered the HRC futures complex recently, both commercial and financial types. That has happened as the broader metals industry has garnered significant attention from macro- and multi-strategy-minded traders who are seeing the headlines about tariffs.

Liquidity has benefited as a result. Open interest in the HRC futures complex stands at 640,000 st. Several days have seen more than 65,000 st traded.

Scrap futures

Scrap futures have similarly rallied over the past month. Ferrous scrap has been supported by the same tariff concerns. It has also been impacted by cold and inclement winter weather across the Midwest. The severe weather has raised truck freight rates and slowed down shipments. Additionally, sources have noted that some Canadian scrap tonnage remains sidelined.

The legacy Midwest No.1 Busheling has shown signs of life, with a mainly flat structure and 2H25 levels trading at $500 per gross ton (gt). That’s despite the contract being set to sunset at the end of this year.

Open interest has grown from lows seen in 3Q25 and now stands at 70,000 gt total. For the newer Chicago No.1 Busheling contract, open interest stands at 28,000 gt. Chicago futures are generally valued at a $10-15/gt discount to the Midwest futures.

Disclaimer

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