HR Futures: Summertime blues

Quietly drifting lower while awaiting clearer signals, the market is trapped between cautious neutrality and creeping bearishness. 

CME Midwest HRC futures curve (July 10 in white, July 3 in orange, June 12 in blue) 

The futures curve clearly reflects this sentiment. Compared to June 12 (blue), the date of my last column and shortly after news broke of a possible Mexico quota exemption deal, and even compared to a week ago (July 3, orange), today’s curve (white) shows continued modest softening, especially in near-term contracts.

Prices for July through November are down around $10, with August notably softer, dropping $31 over the past month. This indicates reduced anxiety around immediate supply disruptions and confirms fading optimism about short-term price strength.

However, contracts further out into 2026 remain relatively stable, suggesting a market that still sees structural support despite current dynamics.  

CME HRC money-manager positioning 

Money-manager positioning reinforces this cautious narrative.

Speculative net length has come in, displaying an unwillingness to aggressively position in either direction. And short positions have gradually risen, though they are still pretty muted compared to historical extremes, reflecting that growing bearishness.

Overall, positioning is neutral to slightly cautious, mirroring the sentiment evident in futures pricing.  

Fundamentally, the steel market continues to navigate mixed signals. Despite healthy mill margins and robust domestic raw steel production, mills remain conservative in their pricing strategies, exemplified by Nucor’s unchanged consumer spot price (CSP) at $910 per short ton (st) this week.

With demand being described as lukewarm at best and lead times seemingly stabilized for now after shortening, any bullish catalyst is limited. It seems the market is stuck, neither bullish enough to move higher nor bearish enough for a substantial correction downward just yet.  

Interestingly, steel futures have shown relative insulation from macroeconomic volatility, including geopolitical tension, oil market swings, and even the recently announced 50% copper tariff starting Aug. 1, as well as broader trade talks.

This implies that market participants are remaining focused on steel-specific dynamics, and with further news likely regarding Mexico and Canada tariff exemptions, any tangible developments, positive or negative, could quickly spark significant market moves once again.  

In short, while current market activity feels quiet, this cautiousness is unlikely to last. Traders remain watchful, and as recent experience has shown, volatility is merely dormant rather than comatose. Clarity may be elusive now, but when it arrives… well, let’s hope that hangover has vanished.

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 by Flack Global Metals or Flack Capital Markets should not be treated as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Views and forecasts expressed are as of date indicated, 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.