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Scrap futures volumes on roller coaster: data

Keywords: Tags  scrap, scrap futures, CME, Midwest No. 1 busheling, AMM Midwest Ferrous Scrap index, lisa gordon


PITTSBURGH — The volume of scrap futures traded on the CME last month fell to the lowest level since its launch after posting its highest total the previous month.

June’s trading volume for CME Group’s U.S. Midwest No. 1 busheling ferrous scrap futures contract totaled 700 gross tons, down from 13,300 tons in May.

May was bolstered by a single position taken in a contract of 12,000 tons, outperforming the previous two months combined and exceeding all scrap futures contracts from September through December last year (amm.com, May 15).

June, however, showed an even smaller presence than the exchange’s September launch, with positions being taken for 1,320 tons. Open interest contracts that have not yet settled total 17,620 tons.

A scrap futures trader said that June was quiet for two reasons. "Market prices got too low for sellers to be interested and there was no conviction driven by supply and demand to try and trade at the higher numbers," he said.

July bids are at $375 per ton, with offers at $390 per ton, compared with $368 and $380 per ton, respectively, in June. The CME contract is based on AMM’s Midwest Ferrous Scrap Index for No. 1 busheling, which settles on the 10th of each month.

The July scrap market took a sharp upturn but the spike was not enough to motivate speculators, the futures trader said. "Even though the physical market flipped so quickly, there was no buying interest as it is unsure if this a sustained rally."

But industry participants are establishing accounts, which is a sign that a lot more trades will be done in the future, he said.


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