Tight supply in the US domestic scrap market continues to be a concern, but with Turkish mills quiet this last week of December, prices on the East coast will be under less pressure during the January buy-cycle.
Buying prices to collector's have been raised at yards and results are reported as mixed depending on region. In areas of the Midwest such as Chicago and Detroit, the feedstock for heavy melt and shredded is being considered adequate while several scrap yards in the East coast are calling their inventories extremely tight. Sources note that the recent holiday downtime along with the winter weather limits both scrap collection and processing.
Industrial scrap is also excepted to be limited in January as a result of the holidays and extended auto plant shut downs.
Scrap prices in the Southeast are strongly expected to rise on strong demand. Several US mills and brokers in this region are already stating that ferrous scrap prices may be up by $10-30/mt in January. On the East coast and Midwest market participants expect prices up $10-20/mt.
While most market participants are optimistic about January, some fear that scrap prices may peak in January after three consecutive months of price increases. If this belief is widespread, additional volume-beyond reserves- may be made available by scrap yards during negotiations. Additionally, if exporters are unable to close deals with Turkey and other major destinations, some of that supply may compete with the domestic yards. These two actions would dampen the upward price movement.
Several additional variables that will influence US domestic scrap prices in early 2017 are the following: the depreciation of the Turkish lira against the dollar making US exports more expensive, the potential for US steel mills to leverage the strength of the dollar for importing steel raw materials, and the recent softness in billet prices.