HRC Futures Pull Back as Market Appears Toppy…

After weeks of ascending prices, the hot rolled coil (HRC) futures market has taken a breather in the last couple of days. Prices have retreated by about $5-10/ton down the curve as a weaker than expected Wednesday brought in several new sellers to the market.

November and December periods remain well bid around $660 but, as you move further down the curve, offers are reaching down. Q1 has traded at $650 and is offered over there while Q2 and Q3 are offered at $637 and Q4 at $630. The calendar year 2014 contract traded at $640 with an offer to repeat. As spot prices remain firm, the shift to more bearish sentiment on paper indicates some in the market think prices may be a bit toppy.   

While the futures market is weaker, the physical market remains well supported around $660-680 as lead times are pushing into January at some mills.    

Volumes have remained healthy over the past week with over 20,000 tons trading.

{amchart id=”73″ HRC Futures Forward Curve}
    
U.S. Midwest #1 Busheling Ferrous Scrap (AMM) Prices Stagnant Mid-Month
 
The busheling futures market remained very quiet the past couple of weeks as the mid-month lull in activity in the physical market continues to weigh on the terminal market.  It is too early to call how things will materialize in December, however, initial sentiment is that we may see pricing flat to up $10. The futures market continues to suffer from a lack of liquidity and trading activity as market participants have yet to adopt it as a way to hedge price and manage risk.

Again, there have been no reported trades this past week.

{amchart id=”74″ BUS Futures Forward Curve}