Steel Products
Hot Rolled Futures Consolidate Losses
Written by Bradley Clark
February 22, 2013
Written by: Bradley Clark, Director of Steel Trading, Kataman Metals
The physical HRC market continues to soften as mills offer steel at lower levels this week from a week before. The futures market has experienced a divergence in movements over the past week with the front of the curve weakening while the second half of the year is better bid. We see the Feb contract value at $610, March at $622 and April at $635 all down about $5 from last week. At the same time Q3 and Q4 periods have appreciated in value to $640 up about $5 from last week. This structural movement indicates a worsening sentiment for the coming couple of months but an optimism that the market will recover by the end of the year. We will see how this plays out, however sentiment feels pretty bearish out there at the moment.
Trades on the futures market this week have been spread out evenly down the curve. Q2 has traded between $635-640 and Q3 has traded up to $640 in decent volumes (over 10K tons).
Volumes have been quite robust again this week with over 20,000 tons trading. Open interest has increased a touch over the past few weeks as some traders have opened new positions.
Overall bearish sentiment still prevails in both the physical and futures markets. Some have written or speculated that another price hike is around the corner. In our view that would be a mistake on the mill’s part as the failure of the most recent price hike to take hold has really called into question the efficacy of these announcements without the fundamentals of the market supporting them. A small bump up in scrap prices due to weather issues may fuel some bullish sentiment in the next couple of weeks, but we most likely will only get back to January scrap levels at best, when HRC was transacting in the upper $500’s. Therefore, while a rally in prices would be welcomed by many in the market it feels like we are in store for a few more weeks if not months of weakness. Too many headwinds are still on the horizon for the steel industry.
Below is a table with yesterday’s HRC futures settlement prices on the CME contract for each individual month through Q2 2013 as of 2/20/2013 close:
OPEN INTEREST: 10,370 lots (1 lot = 20 short tons)
Bradley Clark
Read more from Bradley ClarkLatest in Steel Products

EU HR prices gain ground on US, Asian HR still well behind
Section 232 returned on March 12, and since then, the price gap between offshore and US hot band has tightened.

SMU Community Chat replay now available
The latest SMU Community Chat webinar reply is now available on our website to all members. After logging in at steelmarketupdate.com, visit the community tab and look under the “previous webinars” section of the dropdown menu. All past Community Chat webinars are also available under that selection. If you need help accessing the webinar replay, or if your company […]

SSAB announces $74M expansion in Alabama
The project will expand heat treat capacity at its Axis, Alabama plant

Service centers: Mill orders retreat in March
SMU’s Mill Order Index declined in March after repeated gains at the start of the year, according to our latest service center inventories data.

Nucor maintains plate prices
Nucor aims to keep plate prices flat with the opening of its June order book.