Did US domestic scrap prices bottom in May?

US domestic scrap prices went expectedly down about $20/lt across the board in the beginning of May, but the trend for June is still up for debate. Demand for scrap appears to be the main issue and mills are not making big scrap buys in order to keep inventories low. At least one eastern mill has been rumored to cut production in June, which could have a negative impact on scrap pricing. Further, sources tell SteelOrbis that the buying momentum that often occurs when scrap prices reach a perceived bottom did not occur in May and mills only fulfilled their usual buying programs--if not less than usual.

Given the historically unusual trend in scrap prices the past few months, market insiders are hesitant to be too optimistic about June prices. As a result, the direction of scrap prices in early June remains up for debate and predictions for next month have ranged anywhere from slightly up, to sideways to slightly down. For the time being, no major move one way or the other is anticipated. While export scrap prices off the US East Coast have fallen in recent weeks, Turkish mills have been buying regularly--purchasing a few cargos a couple weeks ago and a few more this past week--and exporters believe there is potential for some price firming if Turkish demand remains strong. "Turkish mills are scooping up less expensive US scrap, which could leave less cheap scrap for mills," according to one East Coast scrap dealer. If US mills do push for another decrease in June, they are likely to be met with resistance from dealers.

US domestic scrap prices in early May were as follows: