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Scrap futures contract sees tonnage spike

Keywords: Tags  busheling, Midwest contract, No. 1 busheling, ferrous scrap futures contract, CME, scrap prices, scrap futures, Lisa Gordon


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 March ( 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 weren’t 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 them."

Mill buyers can take futures positions when steelmakers enter long-term contracts.

CME’s contract is based on AMM’s 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 contract’s open interest was at 17,220 tons for settlement through December. June bids are at $368 per ton, with offers at $380 per ton.


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