CME N.EU HRC futures rally on China stimulus

North European hot-rolled coil futures prices rallied on the CME Group's contract today, following increases in the Chinese market.

In the brokered market, November rose by €35/t from the 27 September settlement to €630/t in a 2,500t trade, while January traded at €650/t for 5,000t, up by €20/t from the 27 September settlement. October was up by €15/t at €580/t, at a steep premium to Argus' underlying index of €520/t on 27 September. December also rose by €20/t to €645/t. On screen November and December both traded €35/t higher, while March 2025 rose by €33/t to €670/t.

Physical market participants attributed the increases to China's rally, and the European Commission confirming changes to how imports are registered, potentially opening the door for retroactive definitive duties in the investigation against Egypt, Japan, India and Vietnam. Eurofer is also lobbying for more import measures to reduce the effects of global overcapacity.

The strong futures contango led some derivatives participants to think the first quarter was overpriced, given the structural difficulties still facing the European market, such as Germany's economic slowdown and lower demand from key steel-using industries, such as automakers. "Will Germany really be fixed by January," one source said, suggesting the cost of carry was much lower than the premium in the futures market.

In light of the flurry of trading, September was a new record month for the CME's contract, which launched in March 2020. As of 11:21 in London, just over 218,000t had traded on September, up from the previous record of 205,860t reached in January 2023. More volume has traded this year than last year in January-September — around 923,000t has traded this year, compared with around 913,000t in the same period of 2023.

By Colin Richardson