While the US domestic scrap market is still about one week away from the May scrap market settling, early deals are indicating an uptick in some regions. Sources tell SteelOrbis that initial activity heard in the past week has been largely contained to the East Coast, with some deals already concluded in the Southeast. Early indications point to HMS I, shredded and busheling scrap prices increasing $10/lt each in the East Coast to about $395/lt ($389/mt), $445/lt ($438/mt), and $470-$480/lt ($463-$472/mt), respectively, next month. Export activity has picked up slightly from the East Coast to Turkey as of late, with a few cargos just sold on Thursday, but no real change in export prices is expected in the immediate future.
Therefore, the increase in May scrap prices is expected to be driven by demand from domestic mills, and curtailed supply in some regions. Operating rates remain high, especially among flat rolled mills, and the capacity utilization rate topped 80 percent last week. Meanwhile, dealer sources indicate that supply has lessened, and neither dealers nor mills are holding high inventories, especially with the anticipation of planned outages from some mills in late Q2 and Q3. But while prices are already trending up in the East Coast, the Midwest scrap move in May is not yet certain, with rumors that a couple major mills may not be in the market whatsoever next month, decreasing demand for shredded scrap in the region.