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.

There are fewer sellers appearing up front, however, while June simultaneously comes under pressure as the sell-side interest deepens there.

The May 24 CME HRC closed lower from last Thursday provisionally by $7 per short ton (st) at $812/st on April 25, and was down nearly 13% on the month.

Open interest in the CME HRC dropped following the expiration of the April contract, which settled at $841/st. Daily trade volumes were also below recent averages, and down notably from Q1’24.

A sideways CRU print did little to inform or guide the market in either direction. The weekly Nucor offer number provides some additional price transparency. But the market appears unsure of how to digest the information.

Many commercial participants remain sidelined with little appetite on longer term positioning, while financial interests are primarily on the offer side of the market. Scrap paper activity has been especially quiet as well, and physical scrap participants have also cited a quiet spot market. But some are expecting activity to pick up in coming weeks.

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 should not be treated as a specific inducement to make a particular investment or follow a particular strategy. Views and forecasts expressed are as of date indicated. They 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.

Mark Novakovich

Mark works at Crunch Risk LLC. He has nearly 20 years experience working in physical and financial commodity markets in various roles, including risk management, logistics, and trading. Most recently, Mark worked for S&P Global’s commodity division in sales and product development, where he was responsible for creating price benchmarks and financially-settled futures contracts.