US scrap market - Low inventories make for firm market

Friday, 24 March 2006 09:17:15 (GMT+3)   |  
       

Although scrap prices are not exactly soaring, the market is still firm and healthy, with demand and supply moving in step with one another. Scrap inventories are low, but sufficient enough to meet steel mill demand. Most mills no longer have a several month's supply of scrap, as inventories are now at the 25'000 nt to 30'000 nt level, which is usually less than a month's supply. This is in part due to shortages and transportation issues, making collection and delivery more difficult. Domestic prices for HMS 1 range from $210 /nt to $230 /nt, while HMS 2, is around $10 nt less than HMS 1. A combination of HMS 1 and HMS 2 is the most common export grade from the East Coast. Domestic scrap consumption is very high, and the pricing trend, which has been flat since February, is now slightly up as we look toward the future. Low inventories and high demand persist, especially for industrial scrap. Ford will bid off their industrial bundles this Friday, Chrysler will bid theirs off next Wednesday, and industry experts speculate that prices will be up, not sideways like they were last month. Import sales from the West Coast are only mediocre right now, as China is no longer buying much scrap from the US. It is likely, however, that China will soon start importing from the US again, which will cause a shortage of scrap for domestic consumption, pushing up shredded prices. Turkey has also been importing more US scrap than ever before. Scrap prices may still be sideways in April, but the factors mentioned point to prices rising in the next several months.

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