![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/09/HRC-Futures-300x224.png)
HR futures: Market changes gears
For the first time in weeks, activity in the futures market broke out of the recent “front grinds lower” pattern to provide new insight into the dynamics of the steel industry.
For the first time in weeks, activity in the futures market broke out of the recent “front grinds lower” pattern to provide new insight into the dynamics of the steel industry.
“One thing we know for certain, however, is that when we write our next column, things will have certainly shaken loose.” – Daniel Doderer, April 4, 2024. Above is a good reminder that whenever someone is “certain” of anything, you should probably look at that line of thinking with a healthy dose of skepticism.
It has been six weeks since Flack Global Metals wrote our last SMU column, and if you simply look at the futures curve from then (blue) until now (white), you could argue that very little has changed.
Over my years of observing the steel market, there's been a recurring belief that current market disruptions in either the physical spot market or steel futures are temporary anomalies, destined to fade, and that normalcy will soon return. However, the events of the first few weeks of 2024 served as a stark reminder that this expectation seldom materializes, and that the US steel market is still the most volatile steel market in the world.
We started 2023 with HRC spot pricing around $700 per ton and the third-month future (March ‘23) trading at $800/ton. That same future eventually settled at $1,059/ton - a $259/ton swing. Today, spot pricing is just shy of $1,100/ton for HRC, and the third-month future (March ‘24) settled at $1,091/ton. The clear takeaway: a lot can change over three months. And while future contracts are a valuable tool for hedging, they are a terrible predictor of price.
After a quiet couple of weeks, the futures market has recently come to life over the last three days, and is starting to show some bullish signals.
Over the first three months since Flack started contributing a futures column to SMU, the first sentence has started with some version of “What a month!”