Futures
Hot Rolled Futures Trading More Briskly as Sellers Enter the Market
Written by Jack Marshall
August 11, 2016
The following article on the hot rolled coil (HRC) and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:
Steel
HR futures prices are down over $10/ST Sep’16/Dec’17 over the last week, roughly in line with the different indexes being reported. SMU reported HR down to $600 last. With the indexes continuing to drop, the futures are trading more briskly as sellers enter the market. The larger drop in the indexes appears to have given markets a strong enough signal to sell the curve. Activity has picked up with 23,500 ST trading in the last week. with the focus widening from Cal’17 to Sep’16,Q4’16,Q1’17, Q2/Q4’17, and Cal’17. Sep’16 traded at $582/ST on Tuesday and again today at $574/ST. Q4’16 traded @ $560 in 3,600 ST on both Friday and Monday. Q1’17 traded @ $547/ST average in 4,920 ST on Tuesday and today.
Open interest for HR futures is 376,920 ST or 18,846 contracts.
Scrap
CFR Turkish scrap is holding steady at $229/MT due to robust demand. Higher Chinese Steel prices and Billet prices have kept this market well bid. Narrowing lead times for HR and tepid demand for scrap from mills saw BUS slip roughly $10 to $264 for August. Sep/Dec’16 traded $260/GT today. Market offers look to be coming in slighty in Q4’16. With Sep/Dec’16 bid today at 552.5 and Sep/Dec’16 sold in BUS the metal margin spread is running at roughly $292 which reflects a drop from $300 plus.
Below is a graph showing the history of the hot rolled and busheling scrap futures forward curve. You will need to view the graphs on our website to use their interactive features, you can do so by clicking here. If you need assistance with either logging in or navigating the website, please contact our office at 800-432-3475 or info@SteelMarketUpdate.com.
Jack Marshall
Read more from Jack MarshallLatest in Futures
HR futures: Grinding lower while grinding to a halt
The last time we were together on April 18, the June hot-rolled coil (HRC) future was sitting around the $800 support level where the May future found a bottom in mid-February.
HR futures: Nucor’s price cut makes its mark on steel markets
When we were asked to provide some additional commentary to SMU about the futures markets for flat rolled, our only reluctance to contribute was rooted merely in the fact that SMU (1) already offers an excellent array of authors on this topic and (2) a concern regarding what new ground could be covered that hasn’t already been discussed to death on this issue. Thankfully, however, Nucor has offered up something we can describe, without hyperbole, as simply revolutionary for spot pricing in flat rolled - a development that we simply could not resist commenting on with respect to its probable impacts on the futures market.
HRC futures: Still waiting for clarity
“One thing we know for certain, however, is that when we write our next column, things will have certainly shaken loose.” – Daniel Doderer, April 4, 2024. Above is a good reminder that whenever someone is “certain” of anything, you should probably look at that line of thinking with a healthy dose of skepticism.
HR futures: Activity muted amid quiet spot market
Week-over-week trading activity in US steel derivatives markets was relatively muted, with prices maintaining their downward direction since the beginning of the month. Bids have materialized at the lower end of this range in the May, as the nearby backwardation continues to roll on - just as we saw with April being a premium over May.
HRC futures: Consolidation ahead of a big move?
It has been a crazy 2024 so far for hot-rolled coil (HRC) futures!!!