In mid-May, SteelOrbis reported an expectation of sideways to strong-sideways movement in the US domestic scrap market for June trading. According to sources, the possibility of an upward movement was highly dependent on the volume of ex-US Turkish scrap purchases that initiated as a result of the reduced Section 232 tariff from 50 percent to 25 percent on Turkish steel. An increase in steel production would require substantial increases in scrap import purchases by Turkish mills, sources said, and while Turkish mills increased their buying of ferrous scrap over the past week, purchases were diversified from the Baltics, EU, and the US.
Speaking with East coast sources, SteelOrbis has been informed that due to recent price reductions, scrap feedstock intake at yards decreased in the past month. As a result, regional scrap yards have increased scrap buying prices in the past week.
A source noted that despite the positive effect from the recent Turkish scrap import purchases from the US at improved prices, compared to earlier in the month, “we still do not see enough demand uptick domestically or at export to see much of a price rebound in June.” He added that barring any new developments, the expectation for June scrap trading was sideways across the various grades. A separate East coast source noted that prices in July or August may improve on improved market clarity, tighter supply, and improved scrap demand from emerging markets.
In the Midwest, sources inform SteelOrbis that scrap price expectations for June are primarily sideways due to a slight overhang of scrap inventories on seasonal effect. Additionally, while most mills have reportedly finished their maintenance schedules and are therefore expected to make slightly larger volume buys than in May, mills are expected to closely manage scrap inventories as finished steel prices have slipped and long steel demand may be further affected by some returning Turkish imports.
The US domestic scrap market is expected to trade the week of June 3rd. SteelOrbis reported the downtrend on US domestic scrap prices in May.