CME EU HRC forward curve firming

The CME Group's north European hot-rolled coil (HRC) contract forward curve firmed in early trade today, increasing the contango to spot.

August was lifted at €417/t today, for 500t, meaning a buyer accepted the original offer in anticipation of the market increasing going forward. The CME contract cash settles against the monthly average of Argus' daily northwest European HRC index.

So the buyer believes the index will average over €417/t for August, should they hold the contract to expiry. The month-to-date average for the index so far in July is €395.27/t.

September traded at €428/t for 1,000 t/month, up by €5/t from yesterday's settle. Both trades were brokered by Henry Herbert of GFI, who has done every single trade on the contract since its inception in March 2020, according to Argus records. This amounts to over €11mn ($12.5mn) of trade at today's prices, with 27,700t done in total.

The underlying Argus index has been firming incrementally since ArcelorMittal announced to customers its new offer would be €440/t ex-works for HRC in the north. It reached €399.50/t yesterday, up from a low of €384.50/t on 25 June.

Demand has been increasing, although an inventory overhang in the automotive supply chain continues to constrain service centre margins. Large buyers are now trying to buy September material before they go on vacation.

By Colin Richardson