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    May 8, 2025

    HR Futures: Low-key market despite Trump tariffs

    Written by Mark Novakovich

    Despite the hand-wringing and head-scratching about the impact of President Trump’s tariff policy, the hot-rolled coil (HRC) futures market has been relatively subdued since our last writing of this article.

    While flat prices have firmed over the past month –the second month June’25 HRC position has added $54 per short ton (st) to close at $829/st today. The post-tariff rally has been on somewhat light volume, at least compared to volumes seen earlier in Q1.

    Some commercial traders have said that the rally remains fragile, given end-users’ uncertainty regarding the tariffs’ impacts on supply, demand, and general economic activity. Others have noted that futures values should remain buoyed as the Trump administration is focused on supporting US-based producers. 

    Daily traded volumes have averaged around 20,000 st over the past 30-day period. But Open Interest across the complex never regained the recent highs seen at the end of March. At that time there was 825,000 st open in the CME HRC futures. Currently, there is approximately 680,000 st open as of yesterday’s close, but minimal interest beyond the Aug’25 position.

    The front end of the futures curve remains supported, however. And the backwardation structure marches forward, with the May’25 to Dec’25 HRC futures spread widening from a low seen on April 11 at $19/st, to settle at $64/st as of close today.

    But that is down from the high of $89/st seen on March 18, as demonstrated by the chart below. A short-term focus on nearby shipments, and a lack of forward buying activity from physical participants has prevented the forward part of the futures curve from firming as noticeably as the front.

    Busheling futures

    Activity in the CME’s Chicago Busheling No.1 scrap (BCH) futures has been virtually non-existent, as the BCH contract has failed to participate in the HRC rally.

    The last trade seen in the complex was just 200 st on April 22. Scrap dealers have reported higher values seen in the physical market, but buyers for scrap futures remain few and far between, and bid below levels talked for spot tons.

    Total Open Interest hovers around 43,000 gross tons (gt), and the lead May’25 contract has lost $5/gt since last month to settle at $440/gt today.

    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.

    Read more from Mark Novakovich

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