Market players within the US domestic scrap market were pleasantly surprised by the January price trend, which had scrap prices throughout the US trending up in all regions of the US. In mid-December, SteelOrbis reported that the US domestic scrap market continued to be hindered by high finished steel inventories, still-arriving import tons and diminished steel mill production capacity, which had many believing that January prices would trend sideways.
Prices, however, firmed across the board when mills entered the January buy-cycle. Mills’ scrap inventory levels trended lower than anticipated which led to an uptick in demand for scrap.
It should further be noted that scrap inflow into US scrap yards continued to trend light. Some East coast sources indicated they had been directed to tightly manage scrap yard inventories and to not take on any excess scrap tonnages due to lagging confidence in market prices.
It should further be noted that scrap inflow into US scrap yards continued to trend light. Some East coast sources indicated they had been directed to tightly manage scrap yard inventories and to not take on any excess scrap tonnages due to lagging confidence in market prices.
February scrap prices are expected to be impacted by several factors, including an uptick in weekly raw steel production. According to the most recent data from the American Iron and Steel Industry (AISI), for the week ending January 16, domestic raw steel production was 1,652,000 net tons while the capability utilization rate was 69.1 percent. Production was 1,807,000 net tons in the week ending January 16, 2015 while the capability utilization then was 76.4 percent, which reflected a week-on-week increase of 3.6 percent.
US domestic flat rolled steel mills have also seen an extension in lead times, which is attributed to an uptick in US domestic order activity. Further, still-pending trade case activity for HRC and CRC has many buyers wary of booking tons offshore. US domestic pipe mills, however, continue to run on depressed melting schedules due to still-falling global oil prices.
Scrap broker sources say they believe that mills’ renewed demand for scrap will continue into February. It is thus forecast that East coast January price points, which settled at approximately $167.64/mt ($165/gt) for HMS I/II and $193.04/mt ($190/gt) for shredded scrap, will maintain current levels due to still-hindered scrap inflow into scrap yards, and forecast steady buying activity from US domestic mini mills.