HR Futures: Uncertainty hangs over the steel market

HRC

CME HRC futures prices have continued to rise over the last month, with the March ’25 hot-rolled coil (HRC) futures contract settling at $944 per short ton (st) on March 12. This is an increase of $198/st since contract lows earlier this year on Jan. 22.

Similarly, the April ’25 futures contract settled at $948 on March 12, an increase of $168/st since lows in January of $780/st.

Various exemptions, delays, and alterations to the US tariffs are all factors that have played their part in driving the dramatic rally over the last three months. Now that the 25% tariffs are in effect with no exemptions, a noticeably bullish market has emerged. This is highlighted by the backwardation of the curve structure.

The graph below shows the relationship between the March ’25 and December ’25 futures contract and the backwardation structure that has started to materialize of late. It shows March ’25 at an $87/st premium to December ’25. Similarly, the Q2’25 HRC futures contract is currently at a $72/st premium to Q4’25.

Rising prices are not a theme exclusive only to the futures markets. Steel mills have continued to raise posted prices for physical spot tonnage over the course of the last few weeks. Sources have highlighted that some mills now expect in the region of $1,000/st for HRC in the spot market. This further reinforces an optimistic demand outlook.

Scrap

Scrap futures prices have generally been on the increase over the past month, but at a slower rate than was seen in February. Over the last week, Chicago busheling futures prices have seen a decline.

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