Volatility is up.

S&P is getting routed.

HRC futures taking a hit as well.

Last week, CRU printed: US $651 -5,Germany $494 +1, Italy $481 -3, China $458 +1 (all in short ton).  Differentials still remain extremely elevatedranging from $98 – $213 with Chinese CRC at -201.  TSI daily prices did the following WOW: USHRC prices 656 0, NE HRC €422 +1 ($483.3/st +5.4), ASEAN 497 -3 ($450.8 /st -2.7)and Turkish Scrap 342 -3. 

Platt’s has HRC at 650 -6, whileFlacksteel.com has HRC down 5 to 645.

For the week, the IODEX was up 1.26%to 80.50 while the 3 month was up 1.30% to 80.06.  Today(Monday), there was a big pop in ore andChinese steel prices after China’s government was rumored to declare productioncuts in the wake of last week’s serious smog problem in Northern China andloosen policies on housing purchases.

Steel Stocks were hit hard last week.  Prices did the following: X -10.43% to $32.55,MT -5.28% to $12.02, AKS -20.00% to $6.12, NUE -6.29% to $48.71 and STLD -7.77%to $19.95.  Iron ore miners were alsolower with VALE -1.09% to $10.90, BHP -2.62% to $55.73, RIO 1.23% to $47.75 andCLF -12.02% to $7.32.   

Zinc was up 2.21% to 2308.50.  Gold was up 2.41% to 1221.70 and silver was up2.83% to 17.303.

Crude oil slid 4.37% to 85.82 whilenatural gas was down 4.46% at 3.859.

Currencies:  The dollar index was down -0.9% to 85.912. Theyen (1.91% to 107.66) and Euro (0.89% to 1.2628) strengthened while emergingmarket currencies were mixed with Brazil (1.19% to 2.4291) the only currencywith a moved in excess of 1%, however the ruble continued to depreciate down1.07% to 40.37.

The sharp move in the dollar over thepast 30 and 90 days has led to currency differentials ranging from $20 to as muchas $110 wrt HRC prices.  See Currency tabfor one and three month changes.

Flight to safety led to lower ratesfor 10 years in the US (-6.31% to 2.28%),Germany (-4.11% to 0.89%), Spain (-1.66%to 2.07%) and Italy (0.65% to 2.32%).  Chinese short term shed 4.87% to 2.93% as the PBOC continues to drop ratesto stimulate their economy (actual rates in bold).

There were no economic releases last week thatwere of importance.  The FOMC minuteswere released showing growing concerns over global economic weakness weighingon the U.S. economy being discussed at the last meeting.

I currently have the following upside anddownside risk for HRC prices:

Upside Risks:

        Price Hike
        Sharp drop inimport data
        Trade Case Rumors
        Unplanned outages
        Continuedimproved demand
        Infrastructurebill/long-term solution to highway spending bill

Downside Risks:

        Dollar Strength
        Continued weakiron ore and global finished steel prices
        Weak ore leadingto weak scrap and pig iron prices
        Year-endinventory destocking
        High productionlevels
        Import tons
        Economicdownturn, especially in China or Europe reverberating to U.S.A.
        Weak demand inhousing or automotive