Market sources close to SteelOrbis are hoping the US domestic scrap market will hold sideways into October, but several traders have expressed concern of a possible drop in prices of $5/mt ($5/gt) across all grades.
Compared to 2015, indicators on the demand side such as scrap buys from mills, export demand and steel production have all decreased. On a year-on-year perspective with September basis, scrap buys are down 5 percent while foreign demand for US scrap has decreased by almost 15 percent . Sources close to SteelOrbis note that while foreign demand for US steel has increased from countries such as Mexico the loss of demand from Turkey has not been alleviated.
US import scrap levels, on the other hand, especially busheling, have been on the rise since May and have placed strong downward pressure on prices given the excess supply in the market. July and August encountered large imports from the UK while September deliveries from Canada put pressure on negotiations last week.
A scrap trader in the Midwest stated, “The concern is that even some increased demand may not outpace the overhanging scrap and steady flow into the yards.” Sources close to SteelOrbis believe US mills will continue with a tight inventory strategy into October. A scrap trader on the East coast commented that export firms are not expecting prices to Turkey to increase for the next month as Turkish mills are being cautious due to market uncertainty for their finished goods.
The East coast settled in September at $178-183/mt ($175-180/gt) for HMS I scrap, $208-213/mt ($205-210/gt) for shredded scrap, $208-218/mt ($205-215/gt) for busheling scrap, and $188-193/mt ($185-190/gt) for P&S scrap.
The Midwest settled at $208-218/mt ($205-215/gt) for HMS I scrap, $224-229/mt ($220-225/gt) for shredded scrap, $234-239/mt ($230-235/gt) for busheling scrap, and $221-224/mt ($218-220/gt) for P&S scrap.