HR futures complex slips from June

The CME steel futures complex saw a slight decrease in activity from levels seen at the end of June. This has coincided with a notable decline in flat prices for the nearby futures contract, now August HRC, which is lower by $81 per short ton (st) since last writing on June 13. It settled at $672/st on July 17.

For several weeks, many physical participants had been reporting spot trades well into the $600 range, and this has been confirmed by the major price reporting agencies and Nucor’s own Consumer Spot Price (CSP). This physical spot weakness has translated into front-end futures weakness, but has not materially impacted the back-end of the curve. December settled at $795/st on July 17, unchanged since last writing. Persistent market chatter of a near-term bottom has failed to support the front-end of the futures complex thus far. Still, the expectation for lower-interest rates, inventory rebuilding, and potentially improving economic conditions in Q4 and 2025 have supported the back-end of the steel futures curve. The contango structure has widened dramatically, however, with the August-December structure settling at -$124/st as of yesterday, down roughly $80/st since mid-June.

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.