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    July 24, 2025

    HR Futures: Curve switches gears

    Written by Joshua Toney

    After a period of backwardation driven by headlines and CRU index anchoring, the CME hot-rolled coil (HRC) curve structure has undergone a notable shift. Futures now reflect stronger expectations across the second half of 2025, with a slight contango emerging beyond July ‘25 expiries.

    Spot and curve overview

    The Nucor Consumer Spot Price (CSP) moved down $10 per short ton (st) this week to $900/st. While that level is familiar territory, index-based assessments have yet to firmly clear the $900 threshold.

    Futures markets currently price limited potential for sustained trade above $900/st. Just a month ago, August ’25 was the only contract near that mark. Since then, we’ve seen a visible flattening of the curve.

    The steep backwardation of late June has given way to modest contango beyond near-term contracts. At month-end June, the curve spread from July to November ’25 was +$60/st.

    As of today, that same curve segment is compressed to +$21/st. Most notably, the August ’25 to February ’26 spread has flipped from +$21/st to -$32/st — a $53/st reversal in just 30 days.

    While this represents a relatively modest $2.40/day over 22 trading days, it’s been enough to shift the entire curve structure.

    CME HRC curve structure today vs. 1-month historical

    Source: Bloomberg, CME

    Market positioning (CFTC Commitment of Traders)

    As of July 15, CFTC reporting, physical participants added 25,340/st to their short positioning.

    Managed money remains net long but only added 2,120/st vs. the July 8 data. Swap dealers are positioned long and taking on spread positions adding 8,800 st to their longs and 2,040 st to their spreads. 

    Other reportables remain net short but added to their long and spread positions. Overall, physical hedgers appear to be increasing downside coverage while financial players maintain a cautiously bullish bias.

    Mill margins

    Rolling mill margins remain healthy. Looking ahead, the HRC-BCH futures spread (Sept. ’25 HRC vs. Oct. ’25 Busheling) sits in the $375–$390/st range. This supports continued conversion profitability, even as physical busheling levels for August are anticipated to land between $460–$475 per long ton. Next week’s front-month roll on the CME will align physical and financial benchmarks for better margin tracking.

    US mill margin 6-month chart (US CME HR – CME BCH) rolling basis.

    Source: Bloomberg, CME

    Conclusion:

    The sharp shift in forward pricing and hedging posture reflects a more measured outlook across both financial and physical market participants. While margins remain resilient, the flatter curve suggests more balanced expectations heading into Q3.

    Disclaimer:

    Joshua Toney

    Joshua Toney brings nearly a decade of experience across the ferrous supply chain to this column. He began his career in the physical markets with The David J. Joseph Company (a Nucor subsidiary), trading scrap and metallics across the US. He later helped build out the ferrous derivatives desk at Freight Investor Services (FIS) and most recently led North American ferrous derivatives trading at Marex. Today, he is the Principal of Corsair Elements LLC, an independent research and advisory firm focused on ferrous market intelligence and risk management strategies. His background spans physical and derivative markets, offering readers a unique, integrated perspective on HRC pricing, market structure, and risk transfer in the steel value chain.

    Read more from Joshua Toney

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