Prices
January 14, 2016
Hot Rolled Futures- Price Hikes: How Long Can the Momentum Last?
Written by Spencer Johnson
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 rotates weekly futures articles with Andre Marshall of Crunch Risk, LLC. Spencer can be reached at spencer.johnson@intlfcstone.com.
In our last edition, which has been nearly a month ago due to the holiday break, we wondered about whether the price increases announced in December would be enough to turn the tide on crumbling HRC prices. It looks at this point as though we can firmly answer “yes” to that inquiry, but that doesn’t give us much more insight into the really crucial question; does this mini-rally in steel prices have some staying power, or will it fizzle before long? Here is a look at the price action since our last edition, and you will notice that while prices are certainly up, the contango that was already being priced in accounted for a lot of the price increase already. The result is modestly higher Feb-Dec16 valuations:
