As the April US domestic scrap market settled, sources informed SteelOrbis that expectations of increases ranging from $20-30/gt ($20-30/mt) were dampened with regions such as Ohio and Pennsylvania achieving increases of $10-15/gt ($10-15/mt) on early trades and later facing downward pressure. Commenting on the April outcome, a Pennsylvania source stated, “Fundamentally demand has been steady and largely unchanged from March. We could have been near sideways in April if it was not for some strength on the river system and parts of the Midwest.” In the Chicago and Detroit areas, sources inform SteelOrbis that trades overall achieved increases of $10-20/gt ($10-20/mt) across the various scrap grades in the prolonged negotiations.
Commenting on expectations for the May US domestic scrap cycle, a separate Midwest source said, “With the transportation hedge eroding over the next few months and exporters willing to transport inland, if mill operating rates do not increase we could see a sideways to a slight downward correction in the US ferrous scrap market in May.” The transportation hedge the scrap seller refers to is the slight padding in buy volumes over known monthly needs along with the slight price premium that some mills were willing to pay the last several months to ensure adequate scrap deliveries for continuous production. Delays were being encountered by some mills due to rising river waters affecting barges, insufficient truck drivers, and delayed rail cars.
An East coast source commented that the lack of exports will leave excess scrap availability in the domestic market, thereby placing scrap prices under pressure in May, but a source in Ohio expressed hope that the startup of several regional mills in the coming months can “absorb some of the East coast overhang.”
The consensus that SteelOrbis is hearing from sources for May is sideways to a possible correction downward of $5/gt ($5/mt) on busheling scrap and $5-10/gt ($5-10/mt) on scrap grades such as shredded and P&S.