Futures
HR futures 'hot,' busheling futures 'not'
Written by Andre Marshall
March 7, 2024
Hot rolled (HR) futures have been on a bit of a hot streak recently, while busheling futures have been more in the “not” category.
Hot:
HR futures popped up in the afternoon of Tuesday, March 5, with the futures rising some $30-40 on the nearby months of April and May, and $20-25 in the June-through-August months. As well as on Thursday, markets drove higher again with some surprising moves.
There are rumors that a mill or mills have been selling some spot tons, and therefore will be in the market with a price increase in the near future. This may have spooked some shorts. There was also an announcement Tuesday by the Chinese government about their stimulus plans, which included both monetary and fiscal measures, the latter which surprised some. Crude oil popped up 2% on that day, likely on the back of it.
Maybe HR and all commodities got swept up in the move to start off this little rally? What started the move is maybe less important than that the move was started. It will now need to find out where the sellers appear? $875? $885? To put it in perspective, settles today vs. a week ago have resulted in an increase of $68 for April and $66 for May, respectively, $55 for June, $45 for Q3, and $30 for Q4. Q3 and Q4 were last $875 offered. Volumes have been a little below average.
Not:
Busheling (BUS) futures have actually been quite active, particularly on the second-half months. This is attributed to forward scrap buying meeting bearish hedge selling. There has also been some HR/BUS differential that has traded in the $380-390 per short ton/gross ton metal margin zone. Meanwhile, market intel has it that early mill buying is coming in as low as down $70. Some expect, regardless, that the market will end up more than down $50.
Late added maintenance outages in March and April by a number of mini-mills suggest the order books may be struggling in the immediate period. If steel shorts are concerned about whether mills may impose a price increase, it’s hard to see that if the scrap floor is shifting downward. Unlike HR futures above, BUS futures have moved maybe $5-10 in the back half of 2024, with trades today coming in at $462 per gross ton.
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 Andre Marshall 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.
Andre Marshall
Read more from Andre MarshallLatest in Futures
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!!!
HRC futures: A lot of change lurks beneath the surface
It has been six weeks since Flack Global Metals wrote our last SMU column, and if you simply look at the futures curve from then (blue) until now (white), you could argue that very little has changed.
Mark Novakovich joins Crunch Risk, Jack Marshall retiring
Jack Marshall, a beloved member of the Crunch Risk team, has decided to retire. Jack started his career on the CME floor in 1983, working as a clerk. He then became part of the Chicago origination/trading team in forex at Bank of America, where he worked for 23 years.
HRC futures: Bulls anticipate price increase announcements
2024 started with a $200 per short ton (st), one-week demon drop in the CME Midwest hot-rolled (HR) coil futures. Then, HR futures consolidated in the low $800s/st with the April future trading to as low as $770/st as the curve shifted into contango or upward sloping. A big move was expected, and a big […]