Hot Rolled Futures: The Storm has Arrived

Written by Andre Marshall

When I last wrote I mentioned we would test the S & P 1720-1750 zone before attempting a rebound. We reached a 1737 low and we are now in rebound mode these last two weeks with the market last at 1829 zone. We are headed back to test the highs at 1850 to see if we can put in a higher high. This in a market environment whereby a lot of investors are in “risk-off” mode, and pulling money out of commodities and emerging markets as the uncertainties of the global markets weigh on their sentiment. We appear to be once again a safe haven market here in the U.S. With China uncertainties, and an inflation prone emerging market, investors just are no longer comfortable with their money abroad.

Gold has benefited from the world uncertainty, having risen 5 percent in the last two weeks and 9.8 percent since it’s low Dec. 31st. We are last at $1302/oz on Gold. Technically we could go up to 1400 before this Sep ‘11th bear market resistance is breached. In Copper, we are in a mini rebound rally last at $3.3050/lb from the Jan 3rd of low of 3.1925/lb or a 3.5 percent rise. Although investors are not bullish copper currently basis their outright positions, in fact are somewhat short the market, stock remain in tight supply while demand is still consistent. Everyone expects the supply demand balance to become more oversupplied in the year, but it’s not yet clear when that will transition. In Crude, we have rebounded 10 percent since the Jan 9th low to last $100.37bbl. We put in a new recent high yesterday of $101.38/bbl. Cold weather here and in Europe is giving crude a lift. On a bigger picture chart these price moves have done nothing to add clarity to crude’s direction as we have neither put in a higher high or a lower low that would suggest a direction. However, the support trend from the Jan 2009 low has been broken, and that may be the beginning of a breakdown after this weather related push subsides.


We had a disappointing week in HR futures with only 225 Lots, or 4500 ST trading. The emphasis in the week was further flattening of the curve as the Feb and March months have come down by $5/ST and $2/ST respectively. We are just north of $630/ST from March on out with the 2015 mos. Pegged at $640/ST. CRU came out yesterday at $659/ST, down $11/ST. This appears to be just the beginning basis scrap moves and what the market is reporting on offers from mills.

{amchart id=”73″ HRC Futures Forward Curve}

Latest in Futures