US domestic scrap prices for February delivery are expected to settle sideways to $10-15 per gross ton (gt) higher, market insiders told SteelOrbis in an exclusive weekly survey.
Following recent January SteelOrbis monthly scrap settles, which saw US pricing rise $20-30/gt across all regional US scrap grades east of the Mississippi River, a steady to higher February pricing outcome would mean that scrap prices will have risen by more than 8 percent since the conclusion of November scrap negotiations.
“Everything that I’m hearing is reflecting a sideways sentiment,” said one US Midwest mill-based scrap buyer. “After $50/gt increases over the last two months, I’m not sure there’s more room for more increases.”
During January buy-cycle negotiations, the price of US Midwest shredded scrap, the basis for much of the recent strength seen in domestic long steel markets, increased an average $30/gt to $415-420/gt ($422-427/mt). For Midwest busheling scrap, the grade most keenly watched buy US flat steel traders, prices rose on average a less robust $20/gt to $415-425/gt ($422-432/mt).
“The scrap market for February is sideways right now,” reported another mill-based scrap buyer.
On the US East Coast, solid domestic demand is reported to be reducing scrap deliveries to export docks, even as overseas demand for US scrap remains somewhat limited because of price and export logistics.
“It’s up $15/gt for 80:20 US East Coast scrap,” said one long steel market insider.
“I have not heard too much on the February outlook other than the market is likely to remain firm,” said still another US Midwest scrap insider. “Weather has been a little rough around here [in the Midwest], and, some sellers right now would take [higher pricing], but some others would be happy with sideways.”
“I’m hearing strong sideways right now for February,” remarked still another Midwest scrap supplier. “It’s too early to predict,” said yet another insider. “February is likely to settle no worse than sideways,” he said.
Based on a consensus for a sideways to up $15/gt February US scrap settlement, US Midwest busheling scrap could settle at $420-435/gt ($427-442/mt), while February shredded material could settle near $418-435/gt ($425-442/mt. P&S and HMS scrap could settle near $406-421/gt ($413-428/mt), and $375-390/gt ($381-396/mt), respectively.
On the US East Coast, a sideways to up $15/gt settlement would yield February busheling scrap settlement prices near $380-395/gt ($386-401/mt), while February shredded scrap could finish near $370-385/gt ($376-391/mt). For P&S and HMS grades, a sideways to $15/gt higher settlement would yield a P&S scrap settle near $335-350/gt ($340-356/mt), while February HMS 80:20 scrap might settle in the range of $353-368/gt ($359-374/mt), on a delivered to export yard basis, market insiders told SteelOrbis.
Insiders told SteelOrbis many of the same bullish fundamentals that affected higher January scrap prices could still be in play for the start of February trade.
“I haven’t heard much on February yet, but, a 10-15/gt higher outlook for February scrap is in line with what was being forecast a few weeks back,” said a final US Midwest scrap insider.
At last report, 30-day weather forecasts from the US National Weather Service indicate the US Midwest and Northeast regions could see a continuation of colder and snowier weather during the period, which could continue to reduce supply inflows into scrap storage and processing facilities, and delay or cut scrap deliveries to customers as roads and rivers get snow and ice covered.
As a result of the developing La Nina weather pattern, NWS predicts much of the US Southeast and Southern US regions could see warmer and drier weather during the period. Longer-term three-month NWS forecasts show a return to more normal temperature conditions, though the precipitation outlook for the key US Midwest region, where much US steel is produced, is seen above normal, with more snow and ice forecast, while the Southeast and South could see below normal precipitation and higher than normal temperatures during the period.