While monthly scrap trade is not expected to conclude in the US until at least Dec. 5, December scrap pricing is likely to settle sideways to at least $20/gt ($20/mt) higher as inventory of shredded scrap supply is reported low and the effects of cold and snowy weather are expected to continue to reduce inflows into local collection facilities, market insiders told SteelOrbis this week.
While the December outlook remained sideways for nearly a month, shortly after the US Thanksgiving holiday, market insiders began to report to SteelOrbis an expectation for potentially higher December scrap prices. That higher scrap price forecast focused almost exclusively on shredded scrap.
“To me it appears that the market is up $20/gt and shred might be up more as shred feed is very minimal,” reported one Midwest-based scrap supplier. “Gerdau down south is up $20/gt across the board which makes me think that shred is probably going to have the highest demand in snow regions.” He continued, “Peddlers are not coming in [to the yards] because of the weather. Cold weather is having a big impact on retail scrap flows in snow belt regions, plus export is seeing better demand. Tomorrow, temperatures are expected to drop to 11 degrees [Fahrenheit] in northeast Ohio.”
The US snow belt is a region known for heavy snowfall, primarily in areas to the south and east of the Great Lakes, parts of western New York, Michigan, Ohio, and Pennsylvania, where cold air picks up moisture from warmer lake waters and deposits it as bands or belts of heavy snow.
The US Midwest supplier predicted scrap prices, especially for shredded scrap, could rise between $50-70/gt between now and February because of dwindling inventory and forecasts for cold and snowier weather this year as a result of a developing La Nina weather patterns that will focus on the upper Midwest, the Great Lakes region and parts of the Northeast.
“Shred is up $20/gt, but other grades are not yet finalized,” said still another Midwest mill-based scrap buyer. While other grades remained up in the air as of press time, a developing consensus for the week seems to indicate a mostly sideways sentiment, though some insiders in late trade Dec. 4 cautioned that the amount of sideways scrap available to mills might be limited.
“The chatter in this market right now is that scrap could be up $70/gt come February, so why sell scrap at sideways in December,” the Midwest supplier added. “To my thinking sideways is still questionable and we could very well see obsolete and shred up $20/gt and primes sideways or up $20/gt across the board.”
“The December market’s been pretty quiet with lots of sideways talk and some rumblings of up $10-20/gt on shred,” said another Midwest scrap insider. “Gerdau Steel came out at $20/gt across the board earlier in the week for both their Cartersville and Petersburg mills. Yes sir, it’s a Christmas miracle!”
“Shredded scrap is definitely up, as feed stocks are down, but mills are trying to go sideways,” said another Midwest scrap insider on Dec. 4.
Based on a $20/gt ($20/mt) increase in Midwest shredded scrap pricing, the grade is seen settling at $385-390/gt ($391-396/mt), while busheling scrap is currently assessed sideways to potentially higher at $385-395/gt ($391-401/mt) on a delivered to mill basis. Ohio Valley HMS grades is expected to settle sideways to up for December near $315-335/gt ($320-340/mt), while P&S scrap, which settled flat in November, could settle sideways to higher near its November settle at $351-361/gt ($357-367/mt), scrap insiders told SteelOrbis.
In the US Northeast, scrap insiders said increased export demand could boost December scrap values as importing nations buy more US supply towards increased January shipments. December shredded grades are seen potentially up $20/gt ($20/mt) from November settles near $335-345/gt ($340-351/mt). Prime busheling grade material is likely to settle flat to potentially up near $340-360/gt ($345-365/mt), following its November sideways settlement, while P&S and HMS grades could finish flat to higher than November near $280-290/gt ($285-295/mt), and $295-310/gt ($300-315/mt), respectively, scrap insiders told SteelOrbis.