Open interest hits record high on CME N.EU HRC contract

Open interest on the CME Group's north European hot-rolled coil (HRC) contract reached a fresh record high on 3 September.

When the market closed 9,382 lots, the equivalent of 187,640t, was outstanding. The majority of interest centred on January-March, amounting to almost 4,000 lots, but it spread all the way out to September 2025.

August was the highest month so far this year in traded volume terms, with around 115,000t clearing, surpassing January's 105,380t. It was also the highest volume month since February 2023.

The futures activity stood in stark contrast to the physical market, where liquidity was very low as service centres concentrated on destocking rather than buying replacement coils. Tonnage captured in the index formation process in August was the lowest level since April 2023.

Germany's economic issues continue to depress sentiment in the northern European steel market. Weakening demand from some steel intensive end-users, such as automakers, has caused issues for mills throughout Europe, leading to an increase in spot availability at a time of weak appetite. Lead times are around 3.25 weeks, according to recent deals reported to Argus, as producers struggle to fill their rolling programmes.

Argus' benchmark northwest EU HRC index, which the CME contract cash-settles against, dropped to €576/t at the end of August from €605/t at the start of the month.

The futures curve remains in contango, with the front months softening markedly of late. October traded at €595/t today, down by around €25/t over the past week, while January traded at €644/t, after settling at €676/t a week ago. Physical market participants expect prices to grind lower in the coming months, as service centres continue to focus on cash generation, especially those approaching their financial year-end.

By Colin Richardson