PITTSBURGH The scrap futures market remains in hibernation, with no trades made for a second consecutive month.
Septembers trading volumes for CME Group Inc.s U.S. Midwest No. 1 busheling ferrous scrap futures contract remained at zero, with a lack of volatility in scrap metals prices still the driving force behind the lack of interest.
The CME contract is based on AMMs Midwest Ferrous Scrap Index for No. 1 busheling, which settles on the 10th of each month. The October index settled at $401.16 per ton, up marginally from $400.07 per ton in September (amm.com, Oct. 10).
"The futures market is designed to protect large inventories and there is no need to buy into it right now," according to one broker who focuses on futures.
Octobers bids are at $390 per ton with offers at $400, compared with $395 and $405 per ton, respectively, in September.
The lack of a peak or valley is holding back any growth, a second broker said.
"No volatility has hurt peoples interest, and we need to see some healthy increases to spur people to get off the fence. It is hard for it to gain traction when stable prices have hampered the impetus for people to use (the futures contract)," he said. "If you have a situation of prices not doing a whole lot, then there is not going to be a lot of use for hedging as a tool."
The hot-rolled steel futures market also saw a period of inactivity during its start-up, both futures brokers said.
The scrap market in itself isnt helping the cause, according to the second broker. "Scrap prices could go up $10 a ton next month," he said. "But at todays prices, who is going to get excited about that?"