Ferrous scrap prices for the month of February in the US Midwest are now seen settling at least $20/gt ($22/mt) higher in most areas east of the Mississippi River, as cold weather and snow further reduces in-flows into collection facilities, market insiders told SteelOrbis this week.
Dangerous cold weather combined with snowfall as far south as Houston, Tx., and New Orleans, La., has complicated the movement of scrap to collection points, many of which have continued to report low inventories since late in the 4th quarter, as low prices paid to peddlers combined with early winter weather to reduce inventory.
“Right now, yards are trying to get equipment running and process what little scrap they have in inventory,” said one Midwest scrap insider. “Flows into facilities are terrible, weather remains brutal, and yards are operating on limited hours. The talk in Houston was that markets would be up at least $20/gt for February.”
In the Midwest, problems with the transportation of scrap are not limited to weather-related delays to truck deliveries, as barge transportation of scrap and other products on the Illinois River will be shut down through March as the US Army Corps of Engineers completes work on docks. River closures and restricted movements are reported also on barge movements in Ohio, Tennessee and Kentucky, according to reports from American Commercial Barge Line.
The combination of weather-related transportation issues and low scrap supply at scrap collection points helped to drive higher January scrap values, even as demand for finished steel products remained muted. During the January buy cycle, Midwest and Southeast scrap prices settled $20/gt ($22/mt) higher than their December counterparts, while pricing on the US East Coast was reported sideways to December values on less spirited export scrap demand requirements.
“We’re not hearing all that much in the markets this week, but I have to believe with extremely tight scrap supplies, prices will be up more than $20/gt in February,” said another scrap market insider.
Based on a minimum $20/gt increase for February scrap Ohio Valley HMS 1 could settle at $360-380/gt ($366-386/mt) delivered to customer, while shredded scrap could settle at $415-420/gt ($422-427/mt) on a delivered basis. P&S is likely to settle at $405-$415/gt ($411-422/mt) delivered to customer, while prime busheling scrap could settle at $430-455/gt ($437-462/mt) delivered to customer.
No clear direction is yet forthcoming for the US East Coast for February, therefore it will be assessed sideways for now to January pricing, pending additional data. Insiders said depending on export demand, price hikes in the region also are likely as more supply gets diverted to higher priced Midwest markets. East Coast February HMS is last seen near $335-350/gt ($340-356/mt) delivered to customer, while shredded is likely near to $365-375/gt ($371-381/mt) delivered. P&S is seen at $335-345/gt ($340-351/mt) on a delivered basis based on a sideways expectation, while prime busheling scrap is likely to settle at $390-410/gt ($396-417/mt) on a delivered to customer basis.