Hot Rolled Futures Hold Steady in the Face of an Uncertain Physical Market

Written by: Bradley Clark, Director of Steel Trading, Kataman Metals

The HRC futures market has been exceptionally quiet over the past few weeks with almost no volume trading as the recent price hikes, uncertainty of pricing going forward and middling futures pricing has led most traders to sit on the sidelines awaiting the next price move.   The forward curve has seen a bit better bids with the August value around $645, September $640 and further out the q1 value around $625. All these values are up around $5 from the previous week. It does feel that more offers are starting to build up as we get to the end of the week on September and q4 periods as the sustained price levels are starting to look a bit shaky.

Raw materials, particularly prime scrap are holding steady this month but with the expectations that September will see prices retreat.  This plus the sustained upward movement in prices domestically has begun to invite imports into the US which should have a cooling effect on prices as we head to the end of summer. Without an increase in steel demand it looks likely that the next move is to the downside, the question appears more when than if at this point. 

Volumes in the futures market have been fairly light over the past couple of weeks, but trades have occurred down the curve giving hedgers and speculators alike a chance to position themselves for the next move in the market.