PITTSBURGH The scrap
futures market last month showed its strongest performance
since its launch as bearish sentiment and increased interest
from new speculators brought new contracts.
CME Group Inc.s U.S.
Midwest No. 1 busheling ferrous scrap futures contracts totaled
5,340 gross tons in January, putting the total since its
September debut at 15,460 tons.
Januarys volume was 20
percent higher than the contracts previous record of
4,440 tons in October.
February and March bids have
retreated to $380 per gross ton from $390 (
amm.com, Jan. 28), and offers stand at $395 per
ton. The contract is settled based on AMMs
Midwest Ferrous Scrap Index for No. 1 busheling.
A new entrant to the market said
he decided to actively hedge as he is bearish on the direction
of scrap prices. "I was covering busheling tons to lock in
margins," the recycler said.
While the number of active
contracts is still modest, commercial interest is growing. "A
number of companies have signed up but have not traded,"
André Marshall, chief executive officer of Houston-based
Crunch Risk LLC, told AMM. "Key people in the industry
have organized their accounts. It will take a while, but this
contract will develop."
Marshall said that skeptics have
already been proven wrong as to how far out hedgers are willing
to go. "Some contracts have been brokered through August, yet
people were saying that no one would be crazy enough to go out
that far," Marshall said. "But some are recognizing that taking
a position out this far can help them to lock in the margin of