В данном списке
Металлы

US ferrous futures bounce back awaiting 2022 contract details

Энергия | Energy Transition

Глобальная интегрированная энергетическая модель

US ferrous futures bounce back awaiting 2022 contract details

Самое важное

Mill offers firm as customers look for guaranteed 2022 tons

Prime scrap expected to fall further in October

US hot-rolled coil futures rally slightly Sept. 14, after hitting some resistance from the Sept. 3 record highs. Busheling scrap futures remained under pressure trading lower on lighter trading volumes as prime scrap prices are expected to fall further in October.

Еще не зарегистрированы?

Получайте ежедневные электронные уведомления и заметки для подписчиков и персонализируйте свои материалы.

Зарегистрироваться сейчас

Demand has remained steady as mill offers were firm and customers were focused on 2022 contract negotiations. Some mills were still in no rush to sell any remaining production unless they were to receive higher bids.

Trading volumes were down by almost 34% week on week, according to CME Group data, as futures pulled back from the Sept. 3 highs. The rolling of positions continued as some positions were rolled further into 2021 and into H1 2022 to combat rising spot prices and as customers looked to hedge tons against the planned mill outages and tons replaced by imports. Some September positions were also closed out. The market again saw some fresh buying coming in through March 2023 contracts.

The hot-rolled coil spot market has seen recent transactions up to $1,980/st for October production, with offers at $1,960 in the South and up to $2,000/st from an integrated mill, both for October production. An offer for November production at $1,940/st was also heard from a Midwest mini-mill. Cold-rolled coil tradable values were up to $2,160/st for October/November domestic production.

The Platts TSI US HRC index sat just below the record high at $1,949.75/st on Sept. 14, with prices are up by 94% since the start of the year.

Buyers look to secure guaranteed tons for 2022

The September/October spread tightened slightly during the week. The market continues to see firm spot offers ahead of planned mill outages in September through November. It settled at $35/st backwardation on Sept. 14 as spot prices remain higher for longer.

The structure of the forward curve also firmed during the week. Prices bounced back trading more balanced but remained below the highs set two weeks prior. The September/December backwardation rose to $218/st as the December contract saw continued flows and rolling of positions during the week, with October production almost sold out, pushing prices further down the curve higher with limited availability even for November domestic production.

The rolling of hedges continued in the fourth quarter and across 2022 contracts. The October/November spread traded around $85/st and some short positions were rolled from October to December, last trading around $135/st as positions were rolled and the spreads eased with import lead times pushing further into the quarter. The Q4 2021/Q1 2022 spread tightened slightly to around $173/st backwardation. As fresh some smaller buying came into the whole curve as imports are expected to remain strong into the quarter and to start the new year.

Market sources are still expecting tight domestic conditions now through November, with planned mill maintenance and ahead of contract renewals. One particular contract was heard on an index-linked basis at no discount, though the product was of higher quality.

The December contract settled at $1,712/st on Sept. 14. The contract is still up $102/st from the start of the third quarter. The September/Q4 spread backwardation tightened to around $124/st, as producer offers remained firm despite record margins and profits.

Volumes for 2022 contracts remained steady during the week, as Q1 2022 fell by $52/st, trading around $1,585/st Sept. 14, with 1,375 lots trading in the first quarter during the week ended Sept. 14.

The front part of the curve has seen backwardations build slightly as mill delivery lead times decreased and increasing imports helped keep backwardations intact into 2022, as some service centers have been able to fill inventory gaps.

US mill HRC lead times dipped to 7.9 weeks Sept. 8, well above the 10-year average of 4.96 weeks.

With rising imports heading into the fourth quarter and lead times pushing into year-end, many participants are less willing to book tons at the very end of the year. Even as it will be slightly easier to hedge imports from the short side going forward with futures sitting just below record highs.

Logistics remained challenging, but still, traders were looking to fill the demand gap from outages and as the import arbitrage has widened by importing cargoes from Canada, Turkey, Vietnam and South Korea.

According to the US Census Bureau, preliminary August data shows imports of hot-rolled sheets tracking at 243,198 mt. Imports from Canada are seen at 135,045 mt, while imports from South Korea are expected at 25,136 mt. Imports from South Korea usually feed the US Gulf Coast.

As futures continue to rally, the Platts HRC spot/third-month futures spread on the London Metal Exchange has eased during this trading week. Fundamentals have not changed as backwardations remain throughout the curve.

As of the Sept. 7 close, the last Commitment of Traders report showed short positions by managed money increased by 226 lots to 15,560 lots and spread positions were unchnage at 233 lots. At the same time, commercial short positions increased by 889 lots to 11,819 lots, and swap dealers increased long positions by 203 lots to 4,021 lots.

Electric arc furnace mill margins in the Midwest dipped slightly during the week ended Sept. 14, as prime scrap prices were flat and HRC prices moved slightly lower but still just below record highs. The Platts HRC/MW busheling spread was at $1,418.50/st, and the Platts HRC/shredded spread rose to $1,538.59/st. Margins have risen 112% and 140%, respectively, since the start of 2021.

Prime scrap sees continued pressure

Midwest busheling scrap futures moved lower again during the week ended Sept. 14 as the 2021 curve remained in contango. The October/January spread settled at a $5/lt contango as November traded down to $585/lt.

The wide arbitrage between HRC and busheling scrap attracted buying, especially versus Q4 2021/Calendar 2022 HRC short hedges and verse shredded scrap but market participants remain hesitant to step in front of the momentum.

The November contract settled at a $10/lt backwardation to spot on Sept. 14, as the market started to price in falling prime scrap consumption from planned mill outages and maintenance stretching further into the fourth quarter. December prices have fallen from a high of $720/lt June 22, as some recyclers were able to hedge tons above the $680/lt level, market sources have said. The December contract settled at $592/lt on Sept. 14.

The prime scrap has market has started to loosen slightly even with the slowdown in the auto sector because of chip shortages. Market participants have noted the increased availability of prime. They have also the melting rate of prime over shredded supporting the spread differential. The Platts busheling scrap delivered Midwest spot price fell by $55/lt during the buy week and was last assessed at $595/lt Sept. 14. Mills were in the market late for shredded scrap, giving some support to pricing looking into October.

The busheling-to-shredded scrap differential was flat during the week at $134.25/lt Sept. 14, as Midwest prime scrap prices were flat. Mills look at evolving technologies to better utilize obsolete scrap due to the supply availability of shredded scrap. Market sources cited possible continued weakness in prime scrap looking ahead to the October buy week on the availability of material and expected mill outages.

"Tradable value of down $10/lt to $30/lt from September for October delivery for prime scrap," a supplier said.

Midwest shredded scrap prices were $460.50/lt Sept. 14, down $22/lt from the August buy week.

Southern busheling scrap prices also remained flat at $595/lt on the same day, as were regional shredded prices at $465/lt. Southern prime scrap prices are also expected to come in slightly lower during the October buy week.

Both Platts HRC EXW Indiana and Shredded Scrap Delivered Midwest index futures trade on CME Clearport and CME Globex.