Yesterday, scrap market sources throughout the US were expressing concern that mills might try to get aggressive with prime grade scrap prices during the September buy cycle. And while rumors had indeed swirled that mills might potentially attempt a down $50/gt number from August settled prices, everyone said they felt that number “seemed a bit fanatical.”
All sources had indicated that if mills did attempt to take primes down by that much, they expected there would be widespread market resistance, and that ultimately, primes might potentially settle at down $20-$30/gt.
Today, however, the day started with a proverbial “shot across the bow” when a Detroit-area mill came out at sideways on P&S and shredded and down $50/gt on primes.
“I really thought that number was something that was being talked about but I never expected mills would actually pitch it,” an Ohio Valley-based source said on Friday morning.
Sources throughout the US continue to say they believe there will be “an enormous amount of pushback at that number,” with a Chicago-area source pointing out that if primes did settle at down $50/gt “that would put it below P&S prices in Chicago.”
A source in the Northeast said he too believed that down $50/gt was “a bit much,” and suspected that while busheling is likely to come by some margin this month, that down $20/gt seemed more likely.”
“I think for this month we’ll see that [cuts and shred] pricing will remain stagnant,” a source in the Midwest noted. “There are no flows at these prices, and I guess we’ll have to see how the busheling number goes.”
In terms of why HMS and P&S prices are now likely to hold sideways, as opposed to firming slightly as many suspected, other sources offered the following thoughts.
“Inventory is generally good at some of the mills and some of the unaffiliated mills, like JSW and NLMK Portage have small (or no) [buys this month] because of the low HRC prices,” one source said, adding that HMS and P&S scrap seem to be more aligned with supply and demand.
Another source echoed that sentiment, “I’ve also heard that there are tighter [scrap inflows] for HMS and P&S but it seems like there’s sufficient balance between supply and demand,” he said.
For example, numerous US-based flats mills have planned maintenance outages for this month, with an anticipated outage duration that spans between 6 and 21 days depending on the mill.
For now, market sources say they’re waiting for the other EAFs to announce. Scrap prices are not expected to settle until early next week. And while prices for cuts and shred are likely to be sideways, it’s still too early to call where settled prime prices will ultimately land.