PITTSBURGH The scrap
futures market has enjoyed a sudden spike in tonnage, logging
its strongest monthly performance since its launch.
A single position taken in a
contract in May totaled 12,000 gross tons, outperforming the
previous two months combined and exceeding all scrap futures
contracts from September through December last year.
"The momentum has been building
and people recognize opportunities. This is a good sign," said
Andre Marshall, chief executive officer of Crunch Risk LLC,
Houston. He brokered the May deal, which will settle throughout
the second half of this year.
April trading volumes for CME
Group Inc.s U.S. Midwest No. 1 busheling ferrous scrap
futures contract totaled 3,180 tons, down from 5,280 tons in
amm.com, April 12).
A retreat in scrap prices in
April might have dampened interest. "Things just got quiet, the
market started to drop and (futures) sellers werent
prepared to reach," Marshall said. However, "a number of people
are now signing up to establish accounts as they recognize
there are times where the futures market is going to work for
Mill buyers can take futures
positions when steelmakers enter long-term contracts.
CMEs contract is based on
Midwest Ferrous Scrap Index for No. 1 busheling, which
settled at $377.31 per ton this month (
amm.com, May 10).
Through May 13, the CME
contracts open interest was at 17,220 tons for settlement
through December. June bids are at $368 per ton, with offers at
$380 per ton.