US domestic scrap momentum stalls

After US domestic scrap prices rose less than many anticipated for January, early predictions are increasingly pointing toward a sideways move for next month. Shredded and HMS I scrap prices increased about $25-$30/lt and $15/lt, respectively, depending on the region , in January due in large part to major increases in export scrap prices to both the Far East and Turkey in December. However, in the last couple weeks, export scrap activity has slowed substantially and export prices, particularly to Turkey, have even slightly weakened. So unless export activity picks up, moderate domestic long steel demand alone won't be enough to push scrap prices up next month.

As for busheling, while dealers who sold scrap early this month were able to sell at prices up $20-$25/lt from December, those who waited could only collect a $10-$15/lt premium, depending on the region. An over-hang of pig iron and more availability due to a few mills--such as temporarily idled RG Steel--not making any scrap purchases this month whatsoever led prices to retreat. It is still uncertain as to how much pig iron is still available in the market, but production rates at flat rolled mills remain high and more mills are expected to make scrap purchases next month than in January. Another wild card--the weather--could also reduce scrap availability come early February, allowing for dealers to keep prices sideways and maybe even push for a slight increase.

US domestic scrap prices in early January were as follows: