The March scrap trade is set to pick up steam next week. CME March futures settled Thursday at $440, indicating a decline of $49 month-over-month. Since peaking at $565 on December 13, the March futures price has fallen $125. March Turkish scrap futures settled Thursday at $392, indicating a narrow premium of $48 per bushel to Turkish scrap. March Turkish scrap futures settled at $421.50 on January 29, down $29.50 since then.
March, Chicago Mercantile Exchange busheling futures $/L and Turkish scrap LME futures $/MT
The main reason for the decline in scrap is likely to be the sharp decline in iron ore. Rolling 2Second abbreviation The monthly SGX iron ore contract expired in 2023 at $140.08 per metric ton. The price of crude oil fell from $140 to $125 during the first two weeks of the year. Crude ended January at US$134.14 before falling US$17.64 in February to settle at US$116.50. Notice the chart pattern that shows the highest highs and lowest lows.
Rolling 2Second abbreviation Month SGX Iron Ore Futures $/ton
After a solid correction to start the year, Midwest HRC futures have been range bound over the past two weeks. The March future found support around the $800 level. Will the March future hold $800 and the potential for a bounce? This is one possibility. However, if it drops below $800, crossing the support level, look down.
March CME HRC Future $/st
The February Midwest HRC futures contract expired this week, settling at $917, down $164/month. Open interest (the number of outstanding futures contracts, or tons in this case, across the HRC futures curve) rose by 32,140 short tons (st) m/m in February to 524,880 short tons (st) m/m as of the February expiration on Tuesday night. Notice the increase in open interest along with the downtrend in price which indicates a technically strong bear market.
Rolling 2Second abbreviation CME HRC Forward Month $/st and Open Interest (red) (22-day MA ylw)
Back to busheling, open interest across the futures busheling curve rose to 116,380 last night, the highest level since May 2023. Similar to HRC, busheling saw an expansion in open interest accompanying a more than $100 drop in price, which also indicates technical strength Strong. Alcohols market.
Rolling 2Second abbreviation CME BUS Forward Month $/lt and Open Interest (Red) (22 Day MA ylw)
As mentioned, the market has paused over the past two weeks. Looks like it's strengthening as CRU chases futures. In fact, the difference between CRU and 2Second abbreviation Monthly futures contracts have narrowed from +$188 to +$50 since January 31st.
The future of the Midwest HRC is settled financially using the average of the CRU Midwest HRC Wednesday prints for the month in question. This week's CRU print was $840, down $243 from the January 24 print of $1,083. CRU fell by an average of $48.60 per week during those five weeks. Will this rate of decline continue? Or has the market correction been exhausted? Is the bottom close? Typically, explosive movement is followed by a period of consolidation. Watch what the March future does around the $800 level to see if the market bounces or breaks while anticipating a big move in whichever direction it heads.
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