Domestic ferrous scrap prices in the Canadian market increased by $C5-10/nt yet decreased in US dollars due to volatility in the exchange rate, which went from $1 = C$1.36 one month ago to $1 = C$1.4 this week. A stronger US dollar has made those grades more expensive. Contacts in Canada generally view the scrap market as stable, especially given that the US Midwest domestic scrap market was completely sideways in June.
Participants in Ontario mentioned that scrap demand remains solid as mills in Canada continue to operate at active levels, even though buyers argue there is an oversupply of scrap material. Some buyers expressed surprise that their peers would be quick to implement the $5-10/nt increments; some believe there was room for prices to be lowered due to the alleged generous flows.
In Ontario, the price of #1 busheling increased by C$10/nt to C$565/nt ($444/mt) delivered consumer. The price of HMS I also grew by C$10/nt to C$450/nt ($355/mt) while P&S 5ft appreciated by the same amount to $480/nt ($378/mt). Machine shop turnings (MST) increased by C$5/nt to C$365/nt ($288/mt) delivered, while shredded rose by C$/10nt to C$505/nt ($398/mt) delivered.
For July, Canadian contacts envision another stable month, mainly affected by more exchange rate differentials. This trend would be solidified if the US also remains largely unchanged in July, which is the main projection currently. Some mills in Canada, according to contacts, are contractually obligated to change their prices along with the exchange rate fluctuations, and do not stray from this dynamic. Even if there is an oversupply of material, some believe that will simply find a home south of the border in the US, not affecting the Canadian prices by much.
In Montreal, the price of #1 busheling increased by C$10/nt to C$250/nt ($197/mt) delivered Montreal consumer. The price of HMS I grew by C$10/nt to C$315/nt ($248/mt) delivered, P&S 5ft also rose by C$10/nt to C$355/nt ($280/mt) delivered, machine shop turnings increased by C$5/nt to C$245/nt ($193/mt), while shredder feed decreased by C$10/nt to C$185/nt ($146/mt) delivered.
It should be noted that in Ontario, shredder feed also decreased, and more significantly so, by C$30/nt. Contacts noted that recyclers with shredders on site have seen a decrease in prices of zorba, a non-ferrous grade composed of aluminum and copper that is separated from ferrous srap after passing through the shredder. The grade has fallen due to fluctuations in the London Metal Exchange (LME) prices. To offset that decrease, and protect their margins, they have sought to decrease the costs of their inflows, in this case, of shredder feed.
All monthly changes in the report were calculated by accounting for exchange-rate volatility. Here were the exchange rates in question:
Week of May 12 $1 = C$1.36
Week of Jun 12 $1 = C$1.4
