Volume on the CME Group U.S. Midwest Domestic Hot Rolled Coil (HRC) steel futures contract was moderate this week as 3,200 tons (160 lots) exchanged hands. Prices for HRC contracts in 2010 ranged between $560 and $570 per short ton, while prices for HRC contracts in 2011 ranged between $630 and $645 per short ton. There seems to be quite a disparity between today’s spot HRC prices and expectations for higher prices in the second half of 2011.

Corporate hedgers were actively seeking to lock in fixed HRC prices this week for 2011.

HRC Settlement Prices Move Down Again this Week

HRC settled yesterday on average for the 4th Quarter of 2010 at $566 per short ton which is down $14 per ton from last week’s average settlement price of $580 for the same time period.

HRC settlement prices on average for 2011 declined $18 per ton to $619 yesterday versus last week's average of $637 per short ton for the same time period.

LME Billet Prices Firmer

The LME Steel Billet cash settlement prices were volatile this week with cash settlement prices ranging $420 to $510 per metric ton compared to last Wednesday’s official cash settlement of $447.50. Today the LME Steel Billet cash price was trading at $474.50 today up $27 per metric ton from last week.

The LME Billet contract has a firmer tone than the HRC contract right now. As we have reported in the past, the LME Billet is a very good predictor of U.S. ferrous scrap prices. So we will be on the lookout for any signs that future scrap prices may be getting ready to increase after declining in October.

Written by: SMU Contributing Writer: Joseph Reinmann, CEO Kataman Metals

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