The previously divergent opinions for US domestic scrap prices for June are beginning to move toward expectations of a sideways to down market. In early to mid-May, predictions for the June price trend were almost evenly split. While some believed that the market had some upward potential (especially as US raw steel production levels continue to climb and capacity utilization rates are nearing 80 percent) as mills have been depleting their scrap inventories in recent months, others perceived that there would easily be adequate scrap supply to match demand levels in June. Despite scrap price drops in the last couple months, scrap flows in dealer yards continue to be decent. In particular, availability of obsolete scrap appears to be outweighing that of prime grades, so shredded and HMS I scrap prices could register more of a decline that busheling scrap prices next month. Current predictions are for prices to be sideways to down $10-$15/lt in June.
Additionally, export scrap activity is doing little to help boost the domestic market. Cargos sold off the US East Coast and US West Coast have been minimal in the last few weeks and prices are falling. Offers off the US East Coast to Turkey have now dropped below $355/mt CFR for shredded/HMS I scrap. Nonetheless, some sources remain optimistic that a reversal in the domestic price trend is near. If mills are unable to secure their scrap requirements at lower prices in June, it could force a backlash and therefore a sideways-to-up trend next month. However, if mills are successful in driving down the market and are still able to obtain all their necessary scrap, many believe it will be extremely difficult for mills to push down prices once again in July.