Futures

Hot Rolled Futures: Gaining Some Traction

Written by Jack Marshall

February 2, 2017

The following article on the hot rolled coil (HRC) steel and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:

Steel

Finally getting some traction in HR futures here this past week as prices declined along the curve and especially in the latter half of 2017.  HR futures curve settlements as of last night were down $5-$10/ST in the nearby months and down $15-$20/ST in the latter half of 2017.

A modest 11,200 ST of HR futures have traded this past week in most periods in calendar 2017.  However, with the large decline in values,  bid inquiries have surfaced, which is a nice change from last week where bids were scarce.

Recent trades: $618/ST[$30.90/cwt] traded in Feb’17 this past Friday. $550/ST[$27.5/cwt] traded in 2H’17 on Monday and Tuesday in 4,800 ST.   Today 2H’17 is bid higher at  $560/ST[$28.0/cwt].  Yesterday Mar/May’17 traded at $595/ST[$29.75/cwt]in 4,200 ST.  Today Mar/Apr’17 traded $593/ST[$29.65/cwt] and May/Jun’17 traded $580/ST[$29.0/cwt] in 1,200 ST.

Today HR futures prices along the back half of Cal’17 are firming up after falling in concert with export scrap prices earlier this week.

Below is a graph showing the history of the hot rolled futures forward curve. You will need to view the graph on our website to use its 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.

Scrap

This past week volatility has picked up in the scrap markets as LME scrap futures (HMS 80/20 CFR T) prices dropped precipitously as a number of export cargoes traded hands at much lower prices.  Feb’17 LME scrap for example which 2 weeks ago was trading at $278/MT traded this past week at $238/MT.    Today LME scrap prices have pushed higher with slight contango out through year end.  $250/MT traded today in Feb’17 recovering some of the lost ground of the last week.
BUS scrap early discussions have February down $20/$30/GT.   Current bid interest in 2H’17 is lower at $255/ST following the sharp downturn in CFR T prices.  The arbitrage between HR and BUS remains above $300 ton for ton.

Below is another graph showing the history of the busheling scrap futures forward curve. You will need to view the graph on our website to use its 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.

Jakc Marshall, SMU Contrubutor

Jack Marshall

Jack Marshall has over 30 years of experience trading and marketing financial futures and swaps, including currencies. Before joining Crunch Risk in 2012, Marshall was responsible for Forex Origination for BofA Merrill Lynch in their Chicago office. For Crunch Risk, he focuses on Ferrous scrap futures and helps manage client communications. Marshall is a regular contributor to the Steel Market Update newsletter covering topics including steel and steel scrap futures. He is NFA registered Associated Person and holds a Series 3 license. Marshall can be reached at jack.marshall@crunchrisk.com.

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