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    January 30, 2014

    Hot Rolled Futures: Risk Off

    Written by Andre Marshall

    The following HRC futures article is written by Andre Marshall, CEO of Crunchrisk, LLC and the instructor of our new Managing Price Risk 2 – Strategies & Execution workshop.

    Well the S+P 500 took a turn down starting Thursday and Friday of last week, dropping from 1850 down to a 1770 low yesterday. We have recovered a tad today, last 1794. One can never tell what triggers a market to sell off, if you can call 4.3% a sell off. It might have been the miserable jobs report, or concerns coming out of China concerning their growth and the banking system there, or the continuing tapering by the Fed. Take your pick. Usually a market will have been well overbought when it decides to find excuses to sell off. From here, the S+P will need to breach 1810, the mid-way point of the fall, to find legs to test the 1850 level again. If it fails then we are headed to 1720-1750 as initial support.

    Andre Marshall

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    Several mills that bought October scrap early last week are still asking for additional supplies, scrap market participants said. The reason: the mills' initial prices did not attract enough of the raw material, they said. A trading source based in northern Ohio said three mills have contacted his firm seeking offers for additional tons. He said the mills asked for offers even if prices were higher than their original buys last week.

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    Nucor said on Monday, Oct. 12, that its consumer spot price (CSP) for hot-rolled (HR) coil will be $1,240 per short ton (st) this week, a $10/st increase from a week earlier. The CSP for HR coil from California Steel Industries (CSI) on the West Coast will be $1,305/st, up $15/st from the prior week. Nucor is still offering lead times of three to five weeks, according to the letter to customers. You can track mill price announcements on our website. Steel Market Update (SMU) published a weekly price assessment on Tuesday, Oct. 6, showing HR coil prices averaging $1,270/st, up $10/st from the previous week. We will update our prices on the evening of Tuesday, Oct. 13.