For CME Group hot rolled coil (HRC) volume – November 2013 volume 3,869 contracts traded (77,380 short tons) compared to November 2012 volume 2,198 contracts traded (43,960 ST) – a 37.1 percent increase year over year.
HRC 2013 YTD volume 51,163 contracts traded versus 2012 YTD volume 41,455 contracts traded – a 23.4 percent increase year over year. Given that each futures contract traded has both a buyer and a seller we have seen over 2 million short tons hedged this year.
Comparing changes in “open interest” – both new buyer and new seller entering the HRC futures market. Open Interest year on year comparison – November 2013 14,619 contracts versus November 2012 12,902 contracts – a 13.3 percent increase. Open Interest for November 2013 was 2.4% lower than October 2013 – 14,982 contracts.
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HRC futures: ‘Normalcy’ not seen on near-term horizon
Over my years of observing the steel market, there's been a recurring belief that current market disruptions in either the physical spot market or steel futures are temporary anomalies, destined to fade, and that normalcy will soon return. However, the events of the first few weeks of 2024 served as a stark reminder that this expectation seldom materializes, and that the US steel market is still the most volatile steel market in the world.
HRC futures: Understanding and addressing HRC basis risk
It’s no secret that HRC futures have been particularly volatile over the past several years. The most recent instance was the outsized break in the March futures contract early this week. For companies procuring raw material in anticipation of higher prices or even to get ahead on future purchase orders from customers, understanding the relative price of that raw material versus the hot-rolled coil futures curve is important.
HRC futures: Momentum picking up on HR spot price declines
After holding steady for most of January, the hot rolled (HR) index has started to gain some downward momentum. In the last 30 days, it has declined $89 per short ton (st) and is sitting just above $1,000/st.
HRC futures: A flock of canaries in the mine
Much has happened since we last met on Jan. 4. Cleveland-Cliffs announced a price increase on Jan. 3, lifting the futures market in the morning only for it to finish the day $20-$30 per short ton (st) below those morning highs. On Jan. 4, the futures curve was down another $10-$28/st. And in my column for SMU that evening, I asked a question: Would those aggressive sellers be met with a short-squeeze forcing them to cover, or had the market peaked with the negative price action to start the year the proverbial canary in the coal mine?
HRC futures: Changing futures dynamics
What a difference a few weeks make…. As this is our first column after the new year, it is quite interesting to observe how different the steel world looks at the end of January vs. the end of December.