HR futures: Bottom to prices?

A month ago, when we last presented this column, there was a surprising amount of optimism in the presumably imminent reversal of the downtrend in hot-rolled steel prices in the second half of 2024. We say “surprising” only because this is a momentum market and momentum has remained decidedly to the downside for essentially all US steel product pricing since as far back as January. ‘Picking the bottom’ is indeed a tantalizing prospect but there is a reason this is sometimes also called ‘catching the falling knife’ – reach too soon and it can be painful. And here we are a month later and still both things persist. The downtrend in spot continues to see prices falling to new lows below $670 per short ton (st) this week. But there also remains this persistent optimism that this is the bottom.

Optimism is, of course, relative. On June 3, August HRC futures were trading around $800/st. Now they are at $700/st, but despite a 12.5% drop in a month’s time that $700/ton August price is still a 5% premium to most spot price indices.