Hot Rolled Futures: Active Market

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.