Could we see an abrupt shift now that oil prices have spiked higher? Will we see a rebound in the rig count? Will this create a snap-loading effect (think waterski rope), where the industry suddenly does a 180-degree turn? If so, will that bring with it increased demand for steel products used by the energy industry?
The speed and scale of recent moves are reminders of just how sensitive HRC futures remain to structural shifts and sentiment cues.
Which way will the herd move?
The market appears to be pausing after a turbulent run. But tension remains just beneath the surface. With net long positioning still elevated, sentiment-driven selling could quickly reignite volatility. Still, supply constraints and limited imports are laying the groundwork for a resilient physical market. This moment of calm feels more like a crossroads than a conclusion.
Import arbitrations expressed via futures may become enticing as coil price spreads expand. The spread market in CME US hot-rolled coil (HRC) is currently navigating a period of volatility, with prices fluctuating post-election, leaving traders uncertain about the market's direction.
No more excuses! The election is over. Donald Trump will be inaugurated on Monday January 20 with the Republican party in control of Congress. Now, it is time to get back to work!
CRU Principal Analyst Josh Spoores shares insight into the hot-rolled coil futures market.
While the English language is vast, there is not an endless number of ways to say, “no major changes have transpired.” And if anyone has been tasked with talking about steel price changes in physical and futures US domestic steel market over the last four months, they are probably stretching their ability to its limit.
Flack Global Metals (FGM) Founder and CEO Jeremy Flack will sit down with SMU for a Community Chat webinar on Wednesday, Oct. 2, at 11 am ET. The live webinar is free for anyone to attend. A recording will be available only to SMU subscribers.
Thanks to everyone who attended our Steel Hedging 101 workshop in Chicago on Wednesday. I learned a lot from StoneX Group’s Spencer Johnson, who instructs the course, and from your good questions. One thing that Spencer said sticks with me as I write this column. Namely, that momentum drives steel prices more than other commodity markets. If you watch steel futures, you’ll see up days and down days. But it’s rare to see the momentum shifting back and forth within any given day.
Flack Global Metals (FGM) Founder and CEO Jeremy Flack will sit down with SMU for a Community Chat webinar on Wednesday, Oct. 2, at 11 am ET. The live webinar is free for anyone to attend. A recording will be available only to SMU subscribers.
CRU Principal Analyst Josh Spoores shares with SMU his analysis of the hot-rolled coil futures market.
It had been a relatively quiet and steady CME HRC futures market since the end of August. That was upended by Thursday’s news that instead of a two-week maintenance outage, Cleveland-Cliffs would hot idle the C-6 blast furnace at its Cleveland Works for an uncertain period of time. The CME October HRC contract, HRCV4, gained $22 per short ton (st) on the day to provisionally close at $744/st on Thursday. The first and second quarter futures strips of 2025 gained $25/st and $24/st to provisionally settle at $823/st and $829/st, respectively.
On Aug. 14, the chairman of the world’s largest steel producer, China’s Baowu Steel Group, had some alarming news. He told staff at the firm’s mid-year meeting that conditions in China are like a “harsh winter” that will be “longer, colder and more difficult to endure than expected.”
The CME steel futures complex saw a slight decrease in activity from levels seen at the end of June. This has coincided with a notable decline in flat prices for the nearby futures contract, now August HRC, which is lower by $81 per short ton (st) since last writing on June 13. It settled at $672/st on July 17.
Week over week, the futures curve saw minimal change.
The latest SMU Community Chat webinar reply is now available on our website to all members. After logging in at steelmarketupdate.com, visit the community tab and look under the “previous webinars” section of the dropdown menu. All past Community Chat webinars are also available under that selection. If you need help accessing the webinar replay, or if your company […]
It has been a crazy 2024 so far for hot-rolled coil (HRC) futures!!!
SMU’s sheet prices firmed up modestly this week, even as CME hot rolled futures declined. What gives? My channel checks suggest that demand remains stable and that buyers have returned to the market following new HR base prices announced by mills earlier this month. I’m looking forward to seeing whether lead times, which have stabilized, will start extending. SMU will have more to share on that front when we release updated lead time figures on Thursday. As for HR futures, what a reversal! As David Feldstein wrote last Thursday, bulls expected mill price increase announcements. And we briefly saw the May contract climb as high as ~$1,000 per short ton (st).
2024 started with a $200 per short ton (st), one-week demon drop in the CME Midwest hot-rolled (HR) coil futures. Then, HR futures consolidated in the low $800s/st with the April future trading to as low as $770/st as the curve shifted into contango or upward sloping. A big move was expected, and a big […]
Hot rolled (HR) futures have been on a bit of a hot streak recently, while busheling futures have been more in the “not” category.
The March scrap trade is set to pick up steam next week.
After holding steady for most of January, the hot rolled (HR) index has started to gain some downward momentum. In the last 30 days, it has declined $89 per short ton (st) and is sitting just above $1,000/st.
What a difference a few weeks make…. As this is our first column after the new year, it is quite interesting to observe how different the steel world looks at the end of January vs. the end of December.
Much discussion has centered on HRC futures and option liquidity. The perceived lack of liquidity is often used as a reason for not engaging in risk management, a profound folly in our opinion. Looking back over the last decade, the futures market has seen increased volume. The HRC futures volume in 2023 was 617% of 2013 numbers.
After a holiday period that saw HR futures volumes somewhat muted in December, the first week of January brought with it increased interest reflected in higher volumes.
Trading slowed across the Midwest hot-rolled coil (HRC) futures curve in the final weeks of 2023, with prices drifting mostly sideways through the month of December.
Last week in Chicago, we hosted several metals companies for our bi-annual Metals Price Management Seminar (“MPMS”).
Oct. 26 was my previous Steel Market Update contribution. The night before, Ford and the United Auto Workers (UAW) announced they had reached a tentative agreement for a new labor contract.
In the dynamic landscape of the steel futures market, a confluence of factors is shaping the current narrative.