Hot Rolled Futures: Clear as Mud

SMU contributor Tim Stevenson 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 Tim’s previous role, he was a Director at Cargill Risk Management, and prior to that led the derivative trading efforts within the North American Cargill Metals business. You can learn more about Metal Edge at www.metaledgepartners.com. Tim can be reached at Tim@metaledgepartners.com for queries/comments/questions.

The futures markets have been exhibiting unusual volatility in the past six months, and while it has continued to some degree recently, this last week was a bit tamer on U.S. HRC (see below chart). In some ways, trends in the U.S. seem to be diverging from what is happening internationally, where we’ve seen some more dramatic moves. Factors driving this vary—from worries of impending oversupply on the one hand, to current shortages of physical material in some areas. Politics have also recently come into play, such as Europe’s offer to remove their retaliatory tariffs if the U.S. were to reverse the Section 232 policy, so you’ve got the makings of some real uncertainty!