Busheling futures keep pushing higher

Prompt market bulls crush the US forward Metal Margin

CME Busheling futures continued to storm higher on Monday, with spot-focussed traders continuing to bet that the monthly physical price settlement will surprise to the up-side even as paper traders have become accustomed to higher levels. Last week’s mill price hike announcements seem to have added fuel to the fire, with the result that CME Metal Margin futures actually traded lower on Monday. This is primarily because finished product futures remained rangebound – US HRC futures are already in a strong Contango that prices in full acceptance of the latest hike. Meanwhile in the Mediterranean, the beginning of May weekend has kept trading quiet.

Exchange Prices at 1630 GMT

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LME mini-mill complex futures drifted further sideways on Monday, with some buy-side support for longer-dated periods but no sign of traders willing to cross the bid/offer spread in size. The paper market continues to price in a fairly prompt revival in spot market demand for deep sea scrap cargoes, with the balance of the curve in a mild Backwardation. Finished product futures pricing remains listless.


After Friday’s run-up on the back of US steel mill price hike announcements, US HRC futures appear to have run out of steam with the curve trading sideways from last week’s levels. However, the Contango remains well above the Cost of Carry and continues to incentivise inventory acquisition, even at these higher spot levels.


CME Busheling futures have so far been the primary beneficiary of US steel mill price hikes on Thursday and Friday, with this curve shooting higher once again on Monday, supported by aggressive nearby buying interest. With May priced for a $40/t gain in the monthly settlement and Jun-20 even higher, the paper market is forecasting US EAF conversion margins will be under severe pressure for the forseeable future.


LME Melting Margin futures continue to trade at sideways levels around the cost of production, with Monday’s outright paper markets for Scrap and Rebar providing few clues as to the ensuing direction.

Somehow CME Metal Margin futures are suggesting US EAF steelmakers have shot themslevels in the foot with price increase announcements, with the more bullish Busheling curve weighing on this forward differential. We remain sceptical that these futures will trade at such low levels for long. But, for now, the pressure doesn’t show any sign yet of reducing.


This newsletter references various technical words, phrases acronyms and codes.

You can find explanations for many of these terms in The Board Report glossary.

The product codes and prompt date structures we utilize are as follows:

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