Scrap market sources throughout the US agree that December settled prices are likely to trend upward. The rationale behind this prediction is linked to several factors, such as still-rising HRC prices and seasonal factors, such as hunting season, colder weather, and the start of the holiday season, which are having a negative impact on scrap yard inflows.
“The market appears headed up again and I think we could see similar increases like we had this month,” a Chicago area source said. “I think the [end of the UAW strike] gave the market a confidence boost.”
Others largely agree.
“I don’t believe, at this point, there is much downside risk through February and at this point I would say strong sideways for December,” added a source in the Midwest, while a source in the Southeast said he thinks the upward price momentum seen in November will continue.
“I think the momentum continues but don’t see things getting too crazy in December as it will continue into January as well,” he said. “I’d say primes [will likely be] up $30-$40/gt with shredded and P&S scrap [likely trending] up $10-$20/gt. Pig iron is still affordable relative to busheling, which I think keeps busheling from running away in December. Export pricing has rebounded but doesn’t seem poised to take off either. I think both dealers and buyers would support pricing in this range.”
Sources in the Midwest also pointed out that inflows are slow and scrap demand is up, which is helping set the stage for higher prices in December.
“The only question is how hard the mills plan to run around the holidays but with sales prices up they may be forced to raise prices or get caught short on raw material supply,” one source in that region said, while a second said that while he’s a bit less bullish than some of his colleagues (he’s pegging the market at sideways on cuts and shred and up $20/gt on busheling), he also believes that if that’s the case, January prices could rise sharply.
The December buy cycle is expected to start in approximately 3 weeks.