Trading volume on CME Group's European hot-rolled coil (HRC) futures contract reached a record high this quarter, according to Argus records.
A total of 478,000t of futures had been traded in the third quarter as of 24 September, exceeding the previous quarterly record. Year-to-date traded volumes now stand at over 1.3m t, with over 400,000t traded each quarter so far this year.
The latest quarterly performance reflects growing participation in the contract from steel producers, traders, service centres and end users seeking to hedge price risk amid heightened uncertainty surrounding European steel trade policy and import restrictions.
"Third quarter futures volumes increased as some traders took long positions in expectation of prices rising following the imposition of tighter safeguard measures — this thesis was borne out in July but faltered somewhat in August and September, as the reality of low demand constrained physical price increases and weighed on the forward curve," a trader said, adding, "Recent trade has seen some longs rolling forward their exposure from the fourth quarter to the first, given the slower-than-expected physical increase."
Since the contracts inception in 2020, annual volumes have risen each year. Current volumes indicate that 2026 is on track to become another record year for the contract if trade continues at a similar pace to the first three quarters.
The CME European HRC contract has seen steadily rising participation over recent years as it has become an increasingly important risk-management tool for the region's flat steel market. Activity has been supported by market volatility, shifting trade flows and expectations around changes to EU steel import regulations.
"We are seeing a broader mix of physical and financial participants becoming more active, which is helping to deepen liquidity," brokerage FIS' head of steel Robert Belcher said.
"There has been an increase in trading, especially on spreads from physical traders, but also on quarter period trades in greater volumes than in the past from banks' end-user customers being the growing trader category in the market," GFI steel derivatives broker Henry Herbert said.
