Hot Rolled Futures: Prices Move Lower in 2015

A paradigm shift seems to be underway in the HRC futures market now that prices have broken through the critical support level of $600.  The CRU is now at $584, which is down over 10 percent from around $665 just three months ago.  With futures contracts trading at $580 per ton for the first half of 2015 and $590 per ton for the second half, a lower range for steel prices seems inevitable in 2015.

For most of 2014 prices stayed between $660 and $680.  Going into 2015 this range is likely to be much lower.  Falling prices have been a result of record import levels and the recent plunge in iron ore prices.  Mills have been competing with cheap imports to fill orders, and the fall in iron ore prices has allowed producers, both domestic and abroad, to offer steel at a price not seen in recent years.  Domestic demand for steel has been bolstered by strong automotive sales, but the fall in oil prices has brought concerns of slowing demand from the oil industry.  While the outlook for demand remains uncertain at this time, robust supply is likely to keep prices lower in 2015.