Futures
Hot Rolled Futures: Active Market
Written by Bradley Clark
October 2, 2014
The hot rolled futures market has been active this week. After weeks of very little movement, selling has pushed futures prices into a more dramatic backwardation. Nearby months such as November and December have fallen $7 to $632. Further down the curve, HRC prices have fallen slightly more with all months in 2015 falling $8 to $630.
Selling down the curve has come alongside concerns over falling iron ore prices and a worsening outlook for Chinese demand. Additionally, the dollar has been strengthening which could cause concern for domestic prices as imports become more attractive. However, depressed prices in the futures market has not been indicative of the physical market with the spot price staying around $660 and only recently dipping to $656. Positive data from the U.S. housing and manufacturing sectors were enough to ease concerns from abroad. While some softening has occurred in the spot market, it is unlikely that a dramatic drop in prices will occur in the near future.
Volume has been robust this week with over 350,000 tons trading.
Below is an interactive graphic depicting the latest hot rolled futures forward curve with a comparison to four weeks ago. The graph can only been seen and interacted with when you are logged into the website and reading this article online (otherwise it just appears to be an empty space on your screen).
{amchart id=”73″ HRC Futures Forward Curve}
In the scrap market sentiment has become weaker due to a general weakening in raw materials. Iron ore prices have fallen to what seems to be the “new normal”. Coking coal has not fared well either, although it has not seen as precipitous a drop in prices as iron ore. For the time being, the scrap market seems to be facing downward pressure on the price.
Nothing has traded on the Busheling futures market
Below is another interactive graphic, but for the latest busheling scrap forward curve in comparison to the same curve from four weeks ago.
{amchart id=”74″ BUS Futures Forward Curve}
Bradley Clark
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