During the recent May scrap buy-cycle, prime scrap grades such as busheling trended sideways, and in some deals reported to SteelOrbis from the East coast, prices even ticked up slightly. Shredded scrap, on the other hand, trended down $10/gt ($10/mt) nationally. It received slightly more downward pressure in the Southeast as prices there were elevated compared to the Midwest on strong previous months.
As SteelOrbis reaches out to market participants, sources are primarily expressing two camps of thought for the June buy-cycle.
On one side, busheling scrap is expected to increase $10-15/gt ($10-15/mt) while secondary cut grades such as shredded scrap prices are expected to soften. The strength for busheling prices is attributed to strong demand and automotive retooling shutdowns that may reduce prime scrap by 20-25 percent. Additionally, Voestalpine’s Texas HBI plant has reportedly announced to its customers a planned maintenance in June. Adding to the upward pressure on prime grades is also Nucor’s Louisiana DRI plant’s planned maintenance for approximately 30 days to start in mid-to-late June. Despite reported imports of shredded and busheling from Europe and the Baltics, prime grades such as busheling scrap are expected to have high domestic demand. The impact of Canadian scrap import supply is also being minimized by sources due to railway strike threats in the country along with the same slow pace of rail scrap deliveries being faced in the US. The upward movement of busheling scrap prices based on tight availability is expected to support shredded, HMS I, and P&S scrap prices in the US domestic scrap market.
On the other hand, several sources also express concern of “possibly too much scrap supply to hold grades such as HMS I and shredded sideways.” They contend the possibility that June may be a repeat of May with prime grades trending sideways and mills placing pressure on cut grades with a possible downward trend of $10-15/gt ($10-15/mt). Those that counter this position and support a likely sideways move point to the “need to watch shredded availability due to the Chinese zorba issue.” While it is a non-ferrous product, if aluminum revenues continue to drop, less ferrous shredded scrap supplies may result from lower feedstock prices to sellers as scrap yards balance their financial positions.
Transportation woes continue in the US domestic scrap market as “it continues to force mills to overbuy and hope that they get what they need in a timely manner.” A source informed SteelOrbis that barges through the rivers could see a slight price increase as well since agricultural products may be competing for the transportation resource over the summer. Barge prices along the East coast are not expected to be affected.