Hot Rolled Futures: $500/ton HRC Now a Thing of the Past?

The following article is written by Spencer Johnson of FC Stone LLC. With six years of experience, Spencer provides his customers strategic and tactical advice on protecting themselves against commodity price volatility in the steel markets. Spencer will rotate weekly futures articles with Andre Marshall of Crunch Risk, LLC. Spencer can be reached at spencer.johnson@intlfcstone.com.

We certainly hope the answer to our article title is a resounding “No!”. And the reality is that is of course we will at some point see $500/ton HRC again, but the question is both when and why? The futures market has been asked that first question, and its current answer is “not any time before 2017”. Indeed the forward curve flattens dramatically once you get into the 2016 months with all of April 2016 and beyond valued nearly at par with Q1. Here is how it shapes up:

Spencer Johnson

A broker at FCStone LLC, Johnson is a veteran in the world of steel futures. He has worked with every type of market participant to formulate risk management and trading strategies for steel derivatives. StoneX has also worked tirelessly to grow liquidity and provide access to new ferrous markets for its clients. Johnson is in addition one of the longest serving members of the London Metal Exchange’s steel committee.