For a second straight week, US domestic scrap prices for February delivery were expected to settle sideways to potentially $20/gross ton (gt) higher, market insiders told SteelOrbis in an exclusive weekly survey of market participants.
And, as steady to higher scrap prices for a third straight month seemed more imminent as monthly scrap negotiations for February draw nearer, a developing forecast for abnormally cold and snowy weather across nearly half of the US late this weekend could further trim stocks of US scrap at supply yards as well as further complicate deliveries, insiders said.
“With shredded scrap, inbound flows will slow way down causing shredders to springboard prices if this cold front stays in place for a week or so,” remarked one US Midwest scrap supplier to SteelOrbis. “Flows already are low, but it’s going to just get harder to maintain inventory.”
According to short-term weather forecasts, the approaching winter storm, currently developing over the US West Coast, is expected to affect the transport of steel and scrap in more than 35 states, many of which could see accumulations of more than a foot of snow. Characterized by forecasters as a storm of “high impact and long duration,” significant ice accumulations across the US South as far as Texas are expected to result in significant road closures, potential power outages, and dangerous conditions, they said.
“If the weather gets as cold as predicted, it will force us to shut all of our trucks down,” the scrap insider added, noting that extreme cold weather below 15 degrees Fahrenheit causes diesel fuel in truck fuel tanks to gel, as paraffin wax crystallizes, clogging fuel lines.
“We’re hearing sideways currently for February scrap grades from the mills, but, dealers are still trying to ride the December-January optimism into February,” said another US mid-continent scrap dealer. “We’re hearing sideways all day long,” commented one mill-based scrap buyer to SteelOrbis. One New York state-based scrap supplier said, “We’re expecting to see possibly up $15-20/gt across all grades.
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 nearly 10 percent since the conclusion of November scrap negotiations.
Based on a sideways to $20/gt increase in February scrap prices, US Midwest busheling scrap could settle at $425-440/gt ($432-447/mt), while February shredded material could settle near $418-435/gt ($425-442/mt. P&S and HMS scrap could settle near $411-426/gt ($418-432/mt), and $380-395/gt ($386-401/mt), respectively.
On the US east Coast, a sideways to up $20/gt settlement could yield February busheling scrap settlement prices near $385-405/gt ($391-411/mt), while February shredded scrap could finish near $375-390/gt ($381-396/mt). In P&S and HMS grades, a sideways to $20/gt higher settlement would yield a P&S scrap settle near $340-355/gt ($345-361/mt), while February HMS 80:20 scrap might settle in the range of $358-373/gt ($364-379/mt), on a delivered to export yard basis, market insiders said.
In the US export scrap markets, SteelOrbis overseas scrap insiders reported increasing resistance from local mills against higher price offers or current prices, following the conclusion of most of their February supply procurement. SteelOrbis believes Turkish mills have concluded at least 22 deep sea scrap deals and now have enough time left to exert pressure on prices for the remaining deals to be done for shipment during late February and early March.
