How is US scrap trending for February post Turkey deal?
As the January buy-cycle began, expectations were for a favorably priced deal to Turkey to come through. The lack of a timely deal resulted in US exporters making shredded quantities available inland which began to dampen prices through the buy-cycle. According to a market source close to SteelOrbis, in the Midwest and Pennsylvania areas, many were hoping to reach $340/mt delivered to mill for shredded but by the end of the buy cycle the tonnage available inland by exporters dampened prices to $320-330/mt delivered to mill. The influence of shredded pricing helped to set the stage for some dampening throughout cuts.
The coveted deal to Turkey finally came, but it was heard moving prices down $14/mt on both HMS I/II 80:20 scrap at $282/mt CFR and shredded scrap at $287/mt CFR when compared to the prior mid-December deal. The recent export deal is already influencing the US scrap domestic price outlook downward for February, especially on the East coast, Ohio Valley and Southeast. Given the high dock prices paid by exporters in December, it is evident this latest deal has begun to squeeze profitability spreads on export firms. Dock prices to yards for scrap are being heard adjusting downward according to sources.
In regards domestic mill demand, regional scrap dealers from the Midwest to the East coast are actively seeking deliveries or commitments for delivery within the next few weeks to agree on prices lower than January settled but higher than February potential. According to several market sources, the fear of US scrap prices trending down in February is real though many hope that domestic mill demand can maintain prices soft-sideways, though, much will rely on the quantities of scrap made available by exporters inland.
As part of the ongoing ‘cautious’ sentiment, some mills have been heard placing scrap deliveries on strict delivery schedules not to exceed agreed upon volumes while scrap yards are adjusting purchase prices from collectors down and limiting production of scrap within the yards. According to several sources, scrap prices could decline by as much as $10-15/mt in some regions but note that busheling is on tight supply and that the pressure may be felt deeper on the East coast pricing since inland mills are expressing optimism at maintaining or increasing present capacity utilization rates.