This week we had renewed concerns of a slowdown in the Eurozone, deteriorating manufacturing data, and continued uncertainty over China. Despite that gloomy backdrop, steel output in the U.S. was near a four year high, steel imports into the U.S. were near a four year high, and China’s steel output continues at record levels.
The May spot price for Hot Rolled Coil on CME U.S. Midwest Hot Rolled futures contract settled yesterday at $660, although we have heard physical spot deals being booked easily at $650 and sub $650. On the CME, Q3 HRC settled yesterday at $670, Q4 settled at $673 and Calendar 2013 traded at $685 this week. Anything starting with a “7” is long gone.
Volume on the CME U.S. Midwest Hot Rolled futures contract was firm as 1,700 lots traded (34,000 tons) over the first three days of this week.
Open Interest on the CME hit a record high this past week of 13,187 contracts, or 263,740 tons. An increasing open interest indicates more activity and liquidity for the contract. Increasing open interest is an indication that new money is flowing into the contract and that the present price trend – namely down – will continue. Should Open Interest suddenly decline that will be our signal that the market is liquidating and that the present price trend may be about to reverse. We will keep an eye on Open Interest over the summer for clues as to if and when this current downtrend may start to reverse.
Below is a table with yesterday’s HRC futures settlement prices on the CME contract for each individual month through 2012 as compared to last week:
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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.