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. If you look at the curve month over month, the weaker spot price has been a much bigger factor in the pricing than the recent trade case. The risk of that case has been long thought of as a key driver of forward risk and thus contango in the futures curve.

That being said, the news brought us back up to some higher trading ranges, but that is only because buyers in the futures market for Comex HRC on Sept. 5 seemed to have hit the panic button on the initial news of the trade action that was announced on Thursday. Early day it got wild but the buying frenzies faded into the afternoon and we were mostly sideways on average to start the day Friday (at time of writing). The exception is October, which was back up to $728 per short ton (st) vs. $718/st settlement on Thursday. Here is how it looks month on month vs. our previous report a month ago, and this is even accounting for the rally on Thursday;