Hot Rolled Futures: Searching for Bottom

The fall in hot rolled futures prices seems to have slowed with the CRU down only $6/ton this week compared to an $18/ton drop the week prior.  The second half of the year seems to have stabilized with trades being done at $570-575/ton for Q3 and Q4.  The near term remains softer with bids retreating and offers for Q2 around $560/ton.  Bearish sentiment has dominated the market recently and 2015 prices are on track to be much lower than 2014.

This negative view on the market has stemmed from record imports, robust inventory levels, and dramatically lower input costs for mills.  However, after a $100/ton slide in hot rolled coil prices in recent months, the market may be nearing a bottom.  U.S. Steel will be taking tons off line with an outage in Granite City, IL and Gary, IN, which may lend some support to prices.  Furthermore, discussions of possible trade cases and the possibility of the Great Lakes freezing could also bolster prices in the medium term.  The decline in HRC prices is not over yet.