SteelOrbis sources throughout the US say that soft spot market prices and falling busheling scrap prices has service centers and buyers trending cautious.
“A lot of people have been sitting on the sidelines and I think we’re going to see that continue for the next few months,” a source said, adding that many service centers are keeping their inventories thin. “Our warehouse [inventory] is so thin we could put a bowling alley in it. We’re only buying what’s already been sold.”
A second source agreed. “I think the mass inventory purge is close to over but the problem that we’re all dealing with now is the fact that there’s a lack of clear direction in the market,” he stated. “Interest rates are high, prices are falling, demand is OK but not great and we expect lead time will continue to be short. I also think that when buyers have some confidence that prices have bottomed out, that some restocking will take place, but I don’t see that happening before the first of the year.”
Other sources say that when restocking does start to take place, they believe that service centers are likely to buy “maybe 30% of what they need” due to concerns surrounding interest rates and economy, and concerns about the stability of spot market prices as additional capacity starts to come online.
In terms of current pricing, this week’s HRC spot market price range is being heard at approximately $35-$38 cwt. ($772-$838/mt or $700-$760/nt), FOB mill, against $37-$39 cwt. ($816-$860/mt or $740-$780/nt), FOB mill.
CRC prices, on the other hand, are trending “a bit more flexible,” and while the most common range is still trending at approximately $50-$55 cwt. ($1,102-$1,213/mt or $1,000-$1,100/nt), FOB mill, deals as low as $46 cwt. ($1,014/mt or $920/nt), have been heard within the marketplace.
This aligns with SteelOrbis’ prediction from last week, when we stated that the price gap between HRC and CRC would likely renormalize with CRC prices settling at roughly $10 cwt. ($220/mt or $200/nt) above hot rolled.
“I think we’re going to see prices become increasingly flexible as we head into the end of the year,” a final source added. “Q4 historically hasn’t been the greatest quarter and I see no reason why this year will be any different.”