Futures
CRU: Futures Now Pricing in Further, More Significant Price Declines
Written by Josh Spoores
October 15, 2021
By CRU Principal Analyst Josh Spoores, from CRU’s Steel Sheet Products Monitor
Over the past five weeks since we last reviewed the CME Group’s HR coil futures market, there has been a renewed surge in volatility. Spot prices of physical HR coil have clearly plateaued, yet more likely started a new downtrend, and futures prices have started to move lower in a rapid manner. Granted, physical HR coil prices today are only lower by $18 /s.ton from our Sept. 8 assessment, yet the forward curve has moved at a much faster rate.
We look at contract values for the Monday that proceeds the publishing of this report. For just 2022 contracts, we have seen a steep fall, where futures prices are down $222 /s.ton from a prior value of $1,409 /s.ton for all of 2022 to $1,187 /s.ton as of earlier this week. Last month we mentioned how quickly the iron ore forward curve was repriced and now we have started to see some bearish activity emerge in the U.S. Midwest HR coil futures contracts.
While future values of HR coil have fallen, we have seen an increase in the overall volume and open interest of these contracts. At the close of trading this past Monday, open interest of 37,777 contracts represents 755,540 s.tons of HR coil. This level of open interest has jumped by 15.7% from early September and is up 60% y/y.
Request more information about this topic.
Learn more about CRU’s services at www.crugroup.com
Josh Spoores
Read more from Josh SpooresLatest 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!!!