According to conversations with scrap sources throughout the US Midwest and East coast earlier this week, SteelOrbis was informed that “scrap prices seemed to have more to go before hitting bottom.” East coast prices at the docks were adjusted downward in anticipation of further downward pressure on export prices, especially driven by Turkish mills.
The sentiment changed as rumors of the potential removal of tariffs on Mexico and Canada to facilitate the ratification of the new USCMA (United States Mexico Canada Agreement). Additionally, the Trump Administration surprisingly announced the decrease of import tariffs on Turkish finished steel goods from 50 percent to 25 percent, which is the standard for countries without special agreements.
According to sources, the Turkish mills are set to purchase more scrap from the US. Already, import scrap prices to Turkey have ticked up. The additional export sales are expected to buoy the scrap mart at a time when some expected the possibility of an additional price erosion in June.
An East coast source stated that his expectations for US domestic scrap prices are sideways to slightly up on export demand. He added that an upward move would require substantial export purchases by Turkish mills. A source in the Midwest stated, “Sentiment is sideways to strong-sideways primarily. Some markets may see a slight uptick and others slight downtick due to regional factors. A positive iron ore price movement and an increase in export sales can bring some stability and even upward price pressure to scrap.”
Shredder feed flows are reportedly moving well thereby potentially placing supply-side pressures on price. With maintenance outages completed at most mills, June volumes are expected to be a little stronger than the volumes purchased in May.
A second Midwest source noted that while an increase in export sales is positive news, “so much still depends on steel production and ultimately demand.” The source stated that an EAF representative in the region had disclosed strong bookings on flat-rolled into June but soft sales on long products. With Turkish import volumes increasing with the recent change in tariff percentage, the source noted the concern that domestic longs products may face further downward price pressure which in turn may limit the upward mobility of scrap prices.