Hot Rolled Futures Stuck in No Man's Land

Written by Bradley Clark

The following article on the hot rolled futures market comes to SMU from contributing writer Bradley Clark, Director of Steel Trading for Kataman Metals.

Over the past couple of weeks the HRC futures market has traded within a narrow range reflecting mixed sentiment among market participants. There seems to be a divergence of opinion regarding the direction of the underlying market as recent price hikes have stopped the recent slide in prices.

However, the spread between domestic prices and world prices, the continued fall in both scrap and iron ore, and continued concern for global economic growth have made some skeptical that current domestic steel prices are sustainable moving into next year.  HRC futures prices for next year periods are all trading around $630 per ton. The curve is virtually flat from December onwards and only in a slight backwardation to current spot pricing. 

Volumes have been decent over the past couple of weeks with over 20,000 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}

Scrap prices and iron ore prices continue to decline, with busheling down nearly $40 per ton this month and iron ore testing new recent lows around $75 per ton.

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}

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