Scrap market sources throughout the US have said that while the June buy cycle is unlikely to start until early next week, opinions as to where prices will settle remain largely mixed.
For example, whereas some more optimistic players believe that HMS could trend at sideways to down $20/gt (with a small minority saying they believe that sideways could happen), others believe that down $20-$30/gt for HMS and P&S is “largely in the bag.”
Other sources are far less optimistic when it comes to prime grade scrap, adding they think that busheling could soften by as much as $40-$50/gt. Sources in other parts of the country, however, have been quick to point out that prime grade scrap production remains limited, and they feel that down $40-$50/gt is unrealistic.
Predictions about where shredded scrap prices could land are equally mixed.
And while some market sources have said they feel that scrap prices have softened enough, and that current levels should be the bottom of the market, others believe that mills will try to push prices down.
“Time and time again the mills have said that the price of scrap has nothing to do with the price of steel,” a source said. “But those same mills are pretty fast to roll out price increases when scrap starts going up, and they’re just as fast to try to take scrap down when finished steel prices are falling.”
For example, flat rolled sources are reporting that sheet steel prices are likely to continue to soften for the next 30-45 days, adding that “it’s only a matter of time before US HRC falls below $40 cwt. ($882/mt or $800/nt), FOB mill.” Other sources largely agree, noting reports that some traders have already purchased Korean HRC at $38 cwt. ($838/mt or $760/nt), DDP loaded truck in US Gulf coast ports.
“If people are buying Korean at that level, this tells you where the domestic market is heading,” another source said.
The June buy cycle is expected to start in the early part of next week. Despite some signs of optimism from scrap market sources, prices for all grades are expected to trend down from May settled levels.