US domestic scrap prices may have settled down between $10-$20/lt in several different regions for March buys, but dealer sources have their fingers crossed that the market has finally bottomed.
Prices for busheling scrap in the Chicago region have trended down approximately $20/lt this month to approximately $240/lt, which has priced down $125/lt from levels seen in January.
Looking to the Ohio Valley, Pittsburgh/Cleveland area, prices for P&S scrap have settled down $10/lt month-on-month to $260-$265/lt.
Meanwhile, prices in the Tennessee regions have also settled, to $260/lt for busheling scrap and $250/lt for P&S scrap.
Moving forward, there are several factors that could impact pricing in the next month. Many within the US domestic market feel that export prices to Turkish mills will need to improve before US markets will improve; as of late last week, all market players, including export yards in the US, UK and Europe have made a play to push prices up between $5-$10/mt CFR; ex-Europe and ex-UK scrap cargos have already been booked at the higher price points, which can be seen as a positive.
There are also potential negatives; US weather patterns will also come into play; most of the US East coast and Midwest has been consistently hammered with winter storms for the past few months, which has scrap inflow into the yards off as much as 70 percent in some regions. Once the “spring thaw” starts to take place and scrap once again starts making its way into the yards, leading to increased supply. Others have pointed out that mills in the Chicago region have stalled their melt schedules due to downticks in demand.
On the other hand, others still point out that service and distribution centers, which have been holding off on making “significant buys” due to falling finished steel prices, will likely need to re-enter the market in the second quarter.
It’s also speculated that mills that did “buy heavy” in previous months’ scrap buys will have also depleted their excess stores, which may lead to heavier buys in April.
Although there are still too many moving parts within the market to make any set predictions for the next month, at this point, the pluses and minuses could very well cancel each other out, keeping the market at sideways.