US HRC LME April-June spread in steep contango

The London Metal Exchange’s US hot-rolled coil forward curve saw gains for all but the two-month contract the week ended April 30, as the April-June spread formed a steep contango. Full-week data was available on May 4 following the UK bank holiday the previous day.

The April-June spread’s contango widened to $150.50 to close out the month, up from $133 the week prior. While the remainder of the forward curve stayed in backwardation, all contracts settled above $1,000/st, suggesting elevated HRC prices could persist through the first half of 2022.

The April contract rose by $6.50 to $1,389.50/st, settling $82.50 below the latest daily Platts HRC spot price of $1,472/st.

HRC prices were expected to continue moving higher in the near term as the two- and three-month contracts remained above the daily Platts spot price.

The May contract dropped by $12 to $1,502.50/st, while the June contract ended the week $15 higher at $1,540/st. As expectations of a possible end to the price rally continued to shift further ahead, the September contract also rose by $9.50 to $1465/st.

The 12-month contract saw the largest increase over the week, moving $75 higher to $1,181/st, while the 15-month contract gained ended the week $24 higher at $1,030/st.

The contract’s weekly trading volume totaled 2,690 st the week ended April 30, up slightly from 2,620 st the week prior. The contract has traded a total of 608,970 st since its launch in March 2019.

Spot prices in the physical market remained on an upward trajectory amid ongoing supply constraints. HRC prices gained over $100/st in April and continued to reach new all-time highs after stalling near $1,350/st from late March to mid-April.

— Ingrid Lexova