Futures
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Hot Rolled Futures: Backwardated to the Future
Written by David Feldstein
March 23, 2017
The following article on the hot rolled coil (HRC) futures markets was written by David Feldstein. As the Flack Global Metals director of risk management, Dave is an active participant in the hot rolled coil (HRC) futures market and we believe he will provide insightful commentary and trading ideas to our readers. Besides writing futures articles for Steel Market Update, Dave produces articles that our readers may find interesting under the heading “The Feldstein” on the Flack Global Markets website www.FlackGlobalMetals.com.
Ferrous Futures have been under some pressure over the past week. All three curves remain steeply backwardated.
April LME Turkish scrap futures fall $17.5 to $282.5/t in the past week.
April LME Turkish Scrap & Curve
April SGX iron futures fell to $83/t with the IODEX printing $84.75/t Wednesday night. Iron ore’s steep backwardation may be the primary reason US Midwest HRC prices are backwardated.
April SGX Iron Ore Futures & Curve
April CME Midwest HRC Futures settled at $649/st Wednesday. May settled at $640/st and June settled at $635. European and Chinese HRC have plateaued at current levels for months while the US price continues to move higher. Flat rolled imports continue to be a non-factor and the strength in global prices has provided little new opportunities on the import front. Even if there was an influx of attractive imported tons, there is a three to six month lag time on those orders and data shows service center and OEM inventory levels are relatively low. Demand remains strong and robust across many sectors with a nascent rebound in the energy industry the most intriguing.
However, if oil prices continue to fall causing the rig count and/or production to reverse course, then expect flat rolled prices to follow suit. If scrap and/or iron ore prices continue to fall rapidly, this could spook buyers and pressure HRC prices lower as well. Otherwise, steel industry fundamentals remain strong and the future looks constructive.
April CME Midwest HRC Futures & Curve
I’ve been watching Q3 and Q4 2017 currently around $610/st and $595/st, respectively. The 6 percent and 10 percent delta below the April futures and spot indexes is intriguing.
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David Feldstein
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HR futures: Shifting risk profiles, emerging opportunities
Summer is here, and a familiar sentiment has hit the hot-rolled coil (HRC) futures market. Prices continue to decline in both the spot market and the futures market, with expectations of sub-$800 prices for the remainder of the year.
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HR futures complex slips from June
The CME steel futures complex saw a slight decrease in activity from levels seen at the end of June. This has coincided with a notable decline in flat prices for the nearby futures contract, now August HRC, which is lower by $81 per short ton (st) since last writing on June 13. It settled at $672/st on July 17.
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HR futures: Bottom to prices?
A month ago, when we last presented this column, there was a surprising amount of optimism in the presumably imminent reversal of the downtrend in hot-rolled steel prices in the second half of this year.
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HR futures: ‘Gimme Shelter’
This chart of the rolling second-month CME hot-rolled coil (HRC) future dating back to the start of 2022 has been as volatile as a herd of “Wild Horses.”
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/09/HRC-Futures.png)
HR futures: Market changes gears
For the first time in weeks, activity in the futures market broke out of the recent “front grinds lower” pattern to provide new insight into the dynamics of the steel industry.