Hot Rolled Futures: How to Make Sense of the Curve

SMU contributor Gaurav Chhibbar is a partner at Metal Edge Partners, a firm engaged in Risk Management and Strategic Advisory. In this role, he and his firm design and execute risk management strategies for clients along with providing process and analytical support. In Gaurav’s previous role, he was a trader at Cargill spending time in Metal and Freight markets in Singapore before moving to the U.S. You can learn more about Metal Edge at www.metaledgepartners.com. Gaurav can be reached at gaurav@metaledgepartners.com for queries/comments/questions.

The U.S. HRC market has found buying interest come alive as mills see their lead times extend and find improvement in their order books. The buoyancy of the physical steel market is reflected in the futures curve, as well. Steel futures across the board have moved higher with the shape of the market now in a “contango.”  A “contango” in commodity markets simply means a forward curve shaped such that the nearby prices are below the prices further out.