PITTSBURGH The scrap futures market was markedly quiet
this past week, mirroring the overall scrap market.
CME Group Inc.s U.S. Midwest No. 1 busheling ferrous
scrap futures held steady, with no trades recorded.
So far in January, 1,140 tons have been swapped on the futures
amm.com, Jan. 11
). Februarys bids are at
$380 per gross ton, putting the contracts spread at $20
as offers stand at $400 per ton. The contract is settled based
s Midwest Ferrous Scrap Index for No. 1
With the domestic scrap market on a steady pricing course since
the end of October, interest in hedging the raw material
hasnt been a priority, according to one industry source
who closely follows the exchange.
When there is no volatility, people seem to think there
is no reason to use it, but volumes should pick up when prices
become more erratic. Once one side gets burned, people become
proactive instead of reactive. It is like buying earthquake
insurance after the fact, the source said.
With no sharp price moves apparent for Februarys deals,
interest in the futures is expected to remain low for the time
But people are closely monitoring it, the source
said, adding that most futures trading is done at the beginning
and end of each month.
Scrap clusters into the early part of the month, when the
deals are made and everything settles. It picks up again at the
end of the month, and you see the same behavior in the futures
market, according to the source.
Falling iron ore prices might be another factor motivating
speculators to move to the sidelines, one futures trader said.
Iron ore is falling and it is unknown where it is headed,
and could be causing the market to sit back and watch and
wait, the futures trader said.