Over 70,000 tons of HRC Futures Trade this Week; LME Billet Declines $45
Since our report last week, 71,180 tons (3,559 lots) of Hot Rolled Coil traded on the CME Group U.S. Midwest Domestic HRC steel futures contract. Trade sources report that prices for calendar year 2011 ranged between $630 and $635.
For Fourth Quarter 2010, HRC futures are currently being offered at $605 per ton. The current spot price of HRC settled yesterday at $585 which is down $5 per ton from last week. 10 lots of November 2010 traded hands yesterday at $590.
Corporate steel consumers were again active this week hedging next year’s HRC prices to eliminate price volatility by using the HRC futures market to lock in fixed prices. It has also been heard in the trade that one steel producer has reportedly started to sell HRC futures to lock in fixed price sales for next year.
HRC Settlement Prices Decline $5 per ton for balance 2010 and Decline $3 per ton for 2011
HRC settled yesterday on average for remaining four months of 2010 at $596 per short ton which is down $5 per ton from last week’s average settlement price of $601 for the same time period.
HRC settlement prices on average for 2011 decreased $3 per short ton to $639 at yesterday''s close versus last week''s average of $642.50 per short ton for the same time period.
LME Billet Price Declines $45 per ton this week
The LME Steel Billet cash price settled yesterday at $430 per metric ton down $45 from last week''s report as billet spot prices have now dropped $78 (15.3%) since peaking at $508 on September 6 – just two weeks ago. The LME steel billet contract is historically a good proxy for the direction of U.S. East Coast ferrous scrap prices. This sharp selloff in billet doesn’t bode well for the October scrap market.
Joseph Reinmann is the CEO of metals trader Kataman Metals. Mr. Reinmann will be one of the speakers at SMU first conference in Las Vegas. You can find more information about the conference as well as our Hot Rolled Futures and Price Hedging workshop at www.steelmarketupdate.com/events