Hot Rolled Coil Futures: The World is Flat…

Written by Brad Clark, Director of Steel Trading, Kataman Metals

Last week’s $15 drop down the forward curve has done little to spark new trading interest as prices have bounced a touch off the lows around $620. We are now stuck around the $625 range for the balance of 2013. With the spot indices hovering around the $615 per ton mark a forward curve $5-10 per ton above that leaves little trading opportunities. After months of a steep contango down the curve giving hedgers the chance to sell forward at significant premiums to the spot, the current flat shape to the forward curve does nothing to inspire natural sellers. With that said, the physical market looks to be softening again after the latest mini spike in prices with rates heading down to the $600 per ton mark and below. This decline in prices gives buyers in the futures market little inspiration to pay up to $620. The bottom line is that the futures market is now stuck around levels that neither bears nor bulls are happy with. Something needs to give either way to spur more trading as most await that impetus to come from the physical market which at the moment looks extremely fragile.