In the past several weeks, sources close to SteelOrbis have been relatively uniform in their belief that scrap prices would trend at sideways in September. This was also the prevailing believe as of late Wednesday afternoon, as most sources said they believed the prices would neither go up nor down.
“I’m firmly at sideways,” a source wrote on August 31. “I think we might be finally seeing supply catching up to the weak demand that has existed the last few months.”
A second source agreed.
“I would say the general consensus with the people I talk to is sideways to up a little bit; no one is talking about any downside pressures,” he added.
Today, however, after David Joseph Co. and at least one steel mill sent out a rash of order cancellations, many believe that prices are now likely to soften.
“Well, the market certainly isn’t going up,” a source said earlier today.
Another source said he also speculates the cancellations were sent out in anticipation of lower scrap prices in the upcoming buy cycle. It’s also been speculated that the now-reversed one-week uptrend in US flat rolled steel prices (which had firmed by about $1.00 cwt. last week, only to soften by about $1.00 cwt. seven days later), could prompt mills to attempt to take scrap prices down as a means of preserving their margins.
Whether prices will stay sideways (or trend down), another source said, "is today's big unknown."
"I’m still thinking sideways but this definitely has some weakness to it," a final source added.
The September buy cycle is not expected to start until Tuesday of next week, after the close of the Labor Day Weekend holiday period.