Outlook for US domestic scrap price trend begins to improve

After two months of steep declines, many have echoed sentiments that US domestic scrap prices likely hit a bottom in the beginning of July. During a conference call with investors Thursday, Nucor's Chairman and CEO Dan DiMicco said "there seems to be some indication of stabilization in scrap," and some of the June/July drops "could be given back to the market" in August. Scrap prices plunged over $100/lt over the last two months, which has slowed scrap flow into yards, according scrap dealer sources, and sellers don't want to sell their scrap at such a great loss. Prices have gotten so low, according to one East Coast dealer, that scrap collection has slowed as well. Further, extreme heat in the Midwest and East Coast is also having a negative impact on flows.

Nonetheless, while some anticipate that prices could experience a $10-$30/lt boost in prices, a price uptrend in August is far from certain. Many domestic mills are currently taking planned maintenance outages or have outages slated for August, which lowers the volume of scrap mills would need to purchase. Other negative factors still affecting prices are little export scrap activity over the past week and depressed demand and prices for finished steel prices domestically. While US flats prices have been trending up the last couple weeks, the sustainability of recently announced increases remains in doubt. But even though the August scrap trend won't become apparent for at least another two weeks, for the time being, it appears prices will likely at least move sideways next month.

US scrap prices in early July were as follows: