Market participants inform SteelOrbis that scrap prices are likely to fall again in October as domestic steel orders and export prices have continued to fall. Service centers are replenishing inventory cautiously and the automotive industry steel users may slacken production in fourth quarter. Additionally, export prices on the East coast are down $10/mt ($10/gt) CFR Turkey across all grades in the latest deals when compared to those in early September.
EAF-based mills may lead the way in terms of cost-cutting efforts, potentially pursuing cuts equivalent to those witnessed last month. If successful, prices on busheling and bundles may fall $20-30/mt ($20-30/gt), depending on region, to an average of $213/mt ($210/gt) delivered to mill. Shredded prices may slide $20/mt ($20/gt) further to roughly $203/mt ($200/gt) delivered to mill in most major steel markets. On the East coast, with lower September settled prices due to different market dynamics, prices are also expected down $10-20/mt ($10-20/gt) across all grades.
However, efforts to reduce prices will be moderated by limited supplies of material. Industrial scrap remains plentiful; however, the obsolete grades in specific regions such as the Midwest are increasingly scarce due to a drop in scrap inflow since June.
Finally, flat rolled steelmakers may need to rethink their strategy to avoid being trapped in a self-driven pricing death spiral. A scrap dealer stated, "By lowering scrap prices, they may be encouraging the steel users to delay buying until they see lower steel prices which results in a vicious cycle of soft sales."
East coast scrap settled in September at $178-183/mt ($175-180/gt) for HMS I scrap, $208-213/mt ($205-210/gt) for shredded scrap, $208-218/mt ($205-215/gt) for busheling scrap, and $188-193/mt ($185-190/gt) for P&S scrap, all delivered to mill.