Written by: Joseph Reinmann, Kataman Metals

Hot Rolled Coil (HRC) futures prices on the CME were mixed this week as March rolled off. Q2 2012 prices decreased $3 per ton to $690 while Q3 increased by $1 per ton to $676 and Q4 was essentially unchanged at $675. CME futures prices are essentially at the same levels they were a month ago. We haven’t seen very many months like March where the prices have stayed this stable, remaining in a tight price range for the entire month.

Volume so far this week on the CME U.S. Midwest Hot Rolled futures contract was a paltry 20 lots (400 tons) as traders and hedgers seemed to be looking ahead to the holiday weekend.

Q2-2012 at $690 (Down $3); Q3-2012 at $676 (Up $1) and Q4-2012 at $675 (Unchanged).

Below is a table with yesterday’s HRC futures settlement prices on the CME contract for each individual month through 2012 as compared to last week:



LME Billet Prices Perk Up Today

The LME cash billet market settled today at $505 per metric ton yesterday up $28 per ton from last week.

The three month LME steel billet price settled today at $520 per metric ton up $10 per ton versus last week.

Several cargoes of ferrous scrap were booked this week by the Turkish mills indicating improved demand and that seems to be reflected in the higher LME billet price.
 
We need to see LME Billet prices above $550 to be assured that we are entering into new bull territory.

Iron Ore Firms

While China was away on holiday this week the iron ore swaps market continued to firm on hope that a soft landing for China was on the horizon rather than the dread of a hard landing which had been the overriding fear the past few weeks. Spot prices for 62% Fe content Iron Ore are stable at around 147 dollars per metric ton delivered china with Q2 trading around 144, Q3 140 and Calendar 2013 129.5. Sentiment is bullish going into next week however this recent uptick in prices has been on thin volumes so we maybe on fragile ground unless we see robust demand start to materialize from Chinese mills.

Q2 144/146
Q3 140/142
Q4 138/140
Cal 13 129/131

Scrap Prices Softer in the U.S. but Firming Internationally

Scrap prices have been all over the board this month. In the U.S. most mills have dropped prime scrap prices by $10 to $20 per long ton. Obsolete grades of scrap have moved sideways to down $10 per long ton versus last month’s levels.

However, internationally we’ve had reports that scrap prices in Japan have surged to a six month high on firming demand. And as indicated above, there was a flurry of activity this week by the Turkish mills booking numerous cargoes of scrap from Europe, the U.S. and the Baltic region. Prices paid for cargoes rose by as much as $10 per ton this week with optimism by traders that more cargoes would be booked next week.