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Scrap futures stagnant as market shows little interest

Keywords: Tags  ferrous scrap, scrap futures, CME Group, Midwest index, No. 1 busheling, AMM Midwest Ferrous Scrap Index, scrap prices, Lisa Gordon


PITTSBURGH — The scrap futures market registered no trading activity for a third consecutive month, with the recent inflation of prices unable to draw potential players off the sidelines.

Trading volumes for CME Group Inc.’s U.S. Midwest No. 1 busheling ferrous scrap futures contract remained at zero in October. The contract is based on AMM’s Midwest Ferrous Scrap Index for No. 1 busheling, which settles on the 10th of each month. The November index settled at $431.18 per ton, up 7.5 percent from $401.16 in October (amm.com, Nov. 11).

With the large jump in prices, some scrap market sources were surprised that no one took a position to capitalize on the move.

"Volatility is needed for (scrap futures) to gain traction, but you also need a difference of opinion," one futures broker source said. "Everyone either wants to buy or wants to sell, and there is no difference of opinion."

November’s bids are at $405 per ton with offers at $420, compared with $390 and $400, respectively, in October.

The growing hot-rolled futures market initially saw less interest than the scrap market, with only a handful of trades per year during its first couple of years, the broker said.

"This still provides opportunity for people, and I am still signing up participants and expect inquires to continue to enter the marketplace," he said.


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