HRC Prices Still Falling; Time to Try Catching the Falling Knife?

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.

Commodity markets are cyclical; any broker or analyst would tell you this free of charge. What comes up must come down and vice versa, right? Well HRC pricing is now in the midst of a fairly unprecedented string of declining prices and the panic is starting to feel palpable. In our last salvo for Steel Market Update, we touched on the distinct possibility that the psychologically important $400/ton level may not hold on HRC. That now feels like a distant dream, as hope for support at $400 has vanished with every major index assessing spot prices well below that mark.