HRC Futures: October Declines by $34, Downtrend Emerging

Editor’s note: SMU Contributor David Feldstein is president of Rock Trading Advisors. Rock provides customers attached to the steel industry with commodity price risk management services and market intelligence. RTA is registered with the National Futures Association as a Commodity Trade Advisor. David has over 20 years of professional trading experience and has been active in the ferrous derivatives space since 2012.

In the chart below of the rolling 2nd month Midwest HRC future (now December), the red line represents total open interest (O.I.) across the 36 months of HR futures and the yellow dotted line is O.I.’s 22-day moving average. O.I. is the total number of contracts trading on the exchange, in this case, per day.  The sharp drops in O.I. occur when the front month expires. O.I. fell from 854k tons to 737k last night because of October’s expiration, which settled down $34 at $1,900/st. It was the first monthly decline since August 2020.