Steel Products
HRC Futures Move Sideways Amidst a Skeptical Market
Written by Bradley Clark
February 1, 2013
Written by: Brad Clark, Director of Steel Trading, Kataman Metals
Settlement prices have barely moved this week as the recent price hikes have done little to inspire the futures market.
After a couple of month of sideways movements in the physical market the last couple of weeks have seen the market take a steep turn to the south. Last week’s mill price increase announcements have caused the market to pause and reevaluate pricing ideas. With very little change in underlying market fundamentals, including scrap costs, many feel this week’s current respite in price declines will be short lived. In order for a sustained uptrend in prices the market will need to see demand come on stronger, particularly in the construction and energy sectors to complement the unbounded strength of the auto industry.
Despite moderate volume in the futures market this week, price action leaves little to inspire. The steep slope of the forward curve that we have seen in the futures market over the past month continues to get tamped down as spot prices continued to weaken, which in turn pulled down the prices of the nearby futures months. We see this with a spot price falling to around $600 after January settled at $621.80 while the February futures contract is trading at $635 and March-April is around $645
There seems to be a sentiment bubbling under the surface that futures prices may be set to pull back despite a steady to strengthening physical market. It feels that the recent belief in futures prices moving above $650 has dissipated and a realization that spot pricing is likely stuck in a range between $590-$640 for the first half of this year is beginning to take hold.
Volumes have been decent this week with over 8,500 tons trading focused primarily on the nearby q1 periods.
Below is a table with yesterday’s HRC futures settlement prices on the CME contract for each individual month through Q2 2013 as of 1/30/2013 close
OPEN INTEREST: 10,213 lots (1 lot = 20 short tons)
Bradley Clark
Read more from Bradley ClarkLatest in Steel Products

Active rig counts rise in US and Canada
Drilling activity increased in both the US and Canada last week, according to the latest oil and gas rig count data released by Baker Hughes.

FabArc Steel Supply completes projects in Mississippi, Georgia
FabArc Steel Supply announced this week the completion of two large-scale projects in Georgia and Mississippi.

US rig count slips, Canada ticks higher
ncreases through September, according to the latest Baker Hughes rig count data.

CRU: EC to toughen steel safeguards
The European Commission proposes cutting its steel import quota by almost half, with volumes exceeding the limit facing 50% duties. The region’s steel industry welcomes the move, while other steel-producing nations fear the consequences. CRU published an insight before this announcement, noting that more restrictive trade policy could significantly raise the cost of marginal supply […]

US and Canadian rig counts stabilize
US counts continue to hover just above historic lows, while Canadian figures remain comparatively healthy.