PITTSBURGH The scrap futures market continues its
sluggish growth pace, but volumes traded so far in January have
already outpaced those in December.
CME Group Inc.s U.S. Midwest No. 1 busheling ferrous
scrap futures contract still lacks interest on the buy and sell
side, according to a broker at a New York financial institution
that is active in an array of futures contracts.
Since scrap derivatives are still a bit young, we are
trying to keep the focus on iron ore and hot-rolled coil
futures, he said. When we are ready to push it to
our clients, we will push it. Right now, there is still a lot
of background work being done by major liquidity companies on
scrap futures, and there is not a lot of interest on both sides
of the trade.
Some 1,740 gross tons had been swapped on the futures exchange
through Jan. 24, nearly double the 900 tons in all of December,
which is notoriously slow on Wall Street. The contracts
record so far was 4,400 tons in October, one month after its
Februarys bids have improved to $390 per gross ton from
amm.com, Jan. 18
), but the contracts spread
remains at $20 as offers have risen to $410 per ton. The
contract is settled based on AMM
Ferrous Scrap Index for No. 1 busheling.
One recycler said he has been hedging copper for years and is
watching the busheling derivatives market. Eventually I
can see this as an alternate to pricing on a to be
determined (TBD) basis. Instead of TBD, material could be
moved out and settled on the CME scrap price, he said.