Steel Products
HRC Futures: Uneven Trading Before the Storm
Written by Jack Marshall
September 7, 2023
The hot rolled (HR) forward curve has rebounded following the Labor Day weekend. The index this week surprised a few folks as it barely slid double figures and remains above $750 per short ton (ST). Lots of rumored lower prices for larger volume deals did not get reflected in the index. While the markets remain somewhat more muted with the looming United Auto Workers (UAW) deadline, futures volumes have begun to pick up this week as some hedgers took advantage of the lower futures prices.
October futures traded as low as $675/ST before retracing back above $700/ST. Forecast difficulty remains an issue and is reflected in lower open interest in the longer dated months: 85% of the open interest falls in nearby six months. Q4’23 HR and Q1’24 HR quarters have been more active as folks position around the turn. On a settlement basis, Q4’23 dropped to $706/ST on Sept. 5 and settled today at $734/ST, reflecting the sentiment shift. Next week should be more active with the deadline met.
BUS futures have been under some selling pressure this last week, with the front month trading last at $430/GT. Initial expectations for the Sep’23 BUS settle was down $20 per gross ton (GT), but further selling interest has left the market down an additional $15/GT. At these lower levels we are seeing more inquiries on the buy side. We will have to see what a possible UAW strike does to the supply/demand. Presumably, the stampers have been active as the auto manufacturers have been preparing for a possible interruption.
Disclaimer: The content of this article is for informational purposes only. The views in this article do not represent financial services or advice. Any opinion expressed by Crunch Risk, LLC should not be treated as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Views and forecasts expressed are as of date indicated, are subject to change without notice, may not come to be and do not represent a recommendation or offer of any particular security, strategy or investment. Strategies mentioned may not be suitable for you. You must make an independent decision regarding investments or strategies mentioned in this article. It is recommended you consider your own particular circumstances and seek the advice from a financial professional before taking action in financial markets.
Jack Marshall
Read more from Jack MarshallLatest in Steel Products
US steel imports slipped in August after rising in July
July represents the second-lowest monthly rate for steel imports so far this year.
Rig count update: US count eases, Canada’s flat
Oil and gas drilling activity in the US edged lower last week, while the Canadian rig count held steady at a six-month high.
HR futures: Trade case action official – It was already priced in?!
This month’s column on the markets could be a response to the question of last month, “Are the forward curve prices on Aug. 7 high enough to price in trade case risks?" The market’s answer has been a pretty resounding YES so far, I think.
SMU survey: Lead times edge higher for sheet
Current steel mill lead time averages are a few days longer than levels seen one month prior, but remain near historical lows for both sheet and plate products.
Steel Summit 2024: Hybar CEO accelerating growth plans for US steel market
Hybar CEO David Stickler and SMU Managing Editor Michael Cowden shared a candid conversation about Hybar's ambitious plans on Tuesday morning at the SMU Steel Summit, held in Atlanta this week.