US HRC May-October contracts move higher on LME

The London Metal Exchange’s US hot-rolled coil forward curve registered gains for the front- to six-month contracts the week ended May 21, while the further end of the curve saw significant losses.

The front of the forward curve regained strength over the week following decreases for most contracts the week ended May 14, with the May-June spread’s contango widening from $40 the previous week to $57 as HRC prices were expected to continue rising in the near term.

Still, the remainder of the forward curve maintained a backwardated structure and continued to suggest HRC prices would move significantly lower after July. The July-October spread widened from $150 the previous week to $220.

The May contract increased by $13.50 to $1,537.50/st, settling $57.25 below the latest daily Platts HRC spot price of $1,594.75/st.

The June contract rose by $59.50 to $1,594.50/st, while the July contract ended the week $55 higher at $1,575/st. The October contracts increased by $40 to $1,355/st.

Both contracts on the further end of the curve dropped over the week amid lingering uncertainty over the long-term market outlook. The 12-month contract moved $85 lower to $1,060/st, while the 15-month contract dropped by $58.50 to $1,050/st.

The contract’s weekly trading volume totaled 1,400 st the week ended May 21, down from 4,990 st the week prior. The contract has traded a total of 616,520 st since its launch in March 2019.

Rising contract prices in the futures market were supported by ongoing firm market conditions in the physical market. As availability remained limited and continued to support HRC prices at all-time highs, more buyers reported transactions at around $1,600/st amid constrained supply options.

— Ingrid Lexova