Hot Rolled Futures: Right at Support Line

On the S&P 500, we are right at that support line that I was referring to last week. We have tested the support, but it is not yet been broken and we are last 2089 on the June future.

In Copper we are on our way back to test the recent support line at around $2.70/lb. Basis the chart, unless something changes, we will probably hold $2.70 and go back up to test $3.00/lb zone.

In crude oil we have gone into a range of $44.00-$53.50/bbl. since early February. It could be forming a bottom or it could be forming a bear flag, and we should get a sense soon of which way it wants to break. It’s looks like it’s putting in ever higher lows of late so I will guess we are headed higher on a break.

In equities there’s a good argument for either direction while in commodities they look so depressed relatively that the likelihood is far greater we see a rally rather than further declines. This holds true for the ferrous suite, where no one expected such depressed values.

Steel

This week we traded 1205 Lots or 24,100 ST (short tons). With CRU coming out at $459/ST down $12/ST the futures moved in tandem coming off $10/ST on Q3 and Q4. Meanwhile May traded higher by $10/ST and June traded $5/ST higher than last traded. People definitely getting nervous on nearby months as price hikes expected.

Below is an interactive graph of the HRC Futures Forward Curve. The graph can only be seen when reading this article while logged into our Steel Market Update website:

{amchart id=”73″ HRC Futures Forward Curve}

Iron Ore

Iron ore is doing what most people expected, dropping down into the $40’s. We have hit a record low on the index at $46/MT range. The futures of late have been illiquid and dropping as bids way below get hit on selling liquidation. Here again we’re probably reaching a level where even the big producers aren’t that comfortable to the risk/reward is now to the upside, and it’s really not a question of if, but when the market rallies again. Let’s call May either side of $46.65/MT, June either side of $46.00/MT, Q3 either side of $45.90/MT, Q4 either side of $45.15/MT and Cal ’16 either side of $44.65/MT.

Scrap

CFR Turkey scrap is stable to slightly higher on few trades out of Europe. We are last $262/GT on the index. Rumors abound on our market which looks more positive with sideways movement likely but a rally possible as the first two weeks progresses. There is literally no Shred and that fact should support Bush, whose inventory situation has improved albeit still healthy flows. It’s true spring is coming, but the improved weather won’t help supply if prices don’t climb. 

Another one of our interactive graphs is below with the BUS (CME Busheling Scrap) forward curve.

{amchart id=”74″ BUS Futures Forward Curve}