US domestic scrap settles sideways in Pennsylvania

Coming into July, the US domestic scrap market was expected to trend sideways during the week’s scrap buy-cycle.

According to sources, by Wednesday this week, regional mills had placed as much as half of the month’s buy program under a “to be determined” basis with the balance expected to be placed through earnest negotiations by the end of the week.

As the week came to a close, export demand buoyed domestic scrap prices. Domestic demand for scrap continues to be strong, although some dealers initially expressed concern for potential negative pressure from an “overhang” of shredded scrap supplies. However, shredded scrap was in high demand for export in the East coast and transportation inland is proving challenging in the short-term due to a shortage of railroad cars and guaranteed timely delivery to mills via the rail system. Additionally, some mills slightly increased their demand of shredded scrap volumes.

Despite the wide spread between shredded and busheling prices, prime grades were able to maintain their premium in Pennsylvania. Industrial scrap, which continues in high demand in the US market, has tightened further due to extended maintenance schedules at automotive producers in July. Auto producers are extending the usual summer break schedules to reduce inventories attributed to slower auto sales than expected in the first half of 2017. According to sources, some mills in the Chicago and Detroit region increased the price on prime grades by $10/mt. Busheling increased to $366/mt ($360/gt) and #1 bundles to $371/mt ($365/gt) in some transactions, which moved prices more in line with the pricing in Pennsylvania and Ohio in June.

According to a source, given the market uncertainty both domestically—with Section 232 results pending—along with what may be the peak on export pricing to Turkey and adequate scrap feedstock volumes outside of prime grades (busheling and bundles), it was difficult to achieve increases in the Pennsylvania ferrous scrap market for July.

The Pennsylvania domestic scrap markets settled sideways as follows:

  *Only change: In HMS I, several deals were concluded at $5/mt lower compared to June, which widened the bottom of the range.