Hot Rolled Futures: Relatively Muted

The following article on the hot rolled coil (HRC) steel and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:

Steel

With world commodity indices jumping higher HR futures price action has been relatively muted.  A modest $10 move higher in the latest weeks HR spot ($630/ST) did little to drive price in either direction. The HR curve spot month through Cal’18 has basically been ranging between $630/ST[$31.50/cwt] and $637/ST[$31.85/cwt] with only modest trading volume (14,520 ST) going through in the futures this week. The most active futures period for trading was Sep’17 through Dec’17.

The curve settlement values remain fairly flat spot month out through Cal’18 with just a couple of dollars separating the near dates from the end of Cal’18. While trading activity was light this week, there has been good two-way inquiries driven by strong market moves in Chinese steel prices and world scrap prices. Recent futures price moves have seen Q4’17 futures prices move up to the 640[$32.00/cwt] area only to lose momentum and retrace to the $620/ST[$31.00/cwt] area. This latest move is the third push up toward the $640/ST point, but might just hold as global indices are rising and scrap supplies and alternatives are tight.

Below is a graph showing the history of the hot rolled futures forward curve. You will need to view the graph on our website to use its interactive features; you can do so by clicking here. If you need assistance with either logging in or navigating the website, please contact our office at 800-432-3475 or info@SteelMarketUpdate.com.

Scrap

$350-$360/MT nearby LME steel scrap futures prices continue to put upward pressure on domestic prime scrap prices. In spite of the slowdown in 80/20 cargoes out of the U.S. this week, futures have been active and prices have been scattered. Up one day, down another. Rising prices in the global supply chain have kept prices well bid.

Market chatter has Sep’17 BUS prices rising from $20-$30/GT. Lighter summer auto production schedules, as well as expected shortages of scrap alternatives due to maintenance and higher prices, have kept BUS futures prices well bid.

Latest BUS trades have been recorded in the mid $360 range.

Below is another graph showing the history of the busheling scrap futures forward curve. You will need to view the graph on our website to use its interactive features; you can do so by clicking here. If you need assistance with either logging in or navigating the website, please contact our office at 800-432-3475 or info@SteelMarketUpdate.com.