As negotiations begin during the February scrap buy-cycle in the US domestic scrap market, the rapid decent of ex-US export prices to Turkey is facilitating a downward correction of domestic pricing. Mills further confirmed this expectation after canceling all undelivered scrap orders at the end of January, a common strategy when anticipating scrap prices to fall the following week.
Adding to the pressure in discussions this week are the recent ex-EU and Ex-Baltic purchases by Turkish mills that have moved their import prices as low as $220/mt CFR Turkey for HMS I/II 80:20.
Sources close to the market note, “HMS I/II 80:20 was sold by exporters to Turkey because it has no demand in the US domestic market. The key is the export price of $245/mt price on shredded scrap and remaining volumes held by exporters.”
Another source noted, “We hear that the deep European downward trend should be short lived as the fall in prices has already generated other demand activity for them from other markets, such as Persian Gulf and South East Asian markets, which have been dormant. The same goes for the US. We expect more transactions with India, Bangladesh, and others as prices now are within their recent bidding ranges, though they may move those slightly lower.”
“February demand is looking strong but with export prices being softer, we expect some east to west flow of shredded which will force prices down more on shredded than heavy melt,” stated another source.
On January 27, SteelOrbis reported expectations of US domestic scrap prices dropping $20-40/mt depending on region and grade. On the East coast, mills are expected to move shredded and heavy melt scrap prices down $30-40/mt, while overall scrap prices are expected to decline by $25-35/mt in the Midwest and Southeast. Central region scrap prices are expected to drop by $20-25/mt.
Sources are stating today that the Pittsburgh area, for example, may see a $30-35/mt drop in shredded prices, but only a $25-30/mt decrease in heavy melt prices and a $15-20/mt decrease in prime grade scrap due to extremely tight supplies in the region.