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Ferrous scrap futures contracts quiet on uncertainty

Keywords: Tags  busheling, Midwest No. 1 Busheling Ferrous Scrap Futures contract, CME, scrap prices, Lisa Gordon


PITTSBURGH — The ferrous scrap futures market is having a quiet month, even on expectations that prime scrap prices will rise in March.

Mill buyers and scrapyards are still monitoring activity and setting up trading accounts on CME Group Inc.’s U.S. Midwest No. 1 busheling ferrous scrap futures contract. One mill source indicated that he plans to hedge scrap when he senses the timing is right.

The mill source said he is not extremely bullish on the second half of the year as it remains to be seen what impact Nucor Corp.’s 2.5-million-ton direct-reduced iron (DRI) facility in Louisiana ( amm.com, Jan. 30) will have on the prime scrap market.

While some market players suggested that the new DRI plant, which is scheduled to come online midyear, could result in fewer pig iron imports, others sense the new alternative iron capacity could dampen prices for busheling.

There is no sense hedging in a failing price environment, the mill source noted. One scrap processor told AMM he has taken some futures contracts because he is bearish.

March bids were $390 per gross ton, with offers standing at $410 per ton—stronger positions than a month earlier, when bids were $380 per ton and offers were $395 per ton ( amm.com, Jan. 28). The contract is settled based on AMM’s Midwest Ferrous Scrap Index for No. 1 busheling.

Some 1,000 gross tons had been swapped on the futures exchange through Feb. 22, above the 900 tons swapped in December, which saw the lowest interest since the contract’s launch.

As of Feb. 22, there were 4,800 gross tons of open interest through August; 6,340 gross tons have cleared so far in 2013.


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