During the recent US domestic scrap cycle in July, scrap traded mostly sideways on cut grades such as HMS I, shredded, and P&S scrap while gaining $10/gt ($10/mt) on prime grades such as busheling scrap compared to June settled prices through the Midwest. In the East coast, prices firmed up from the slight downward pressure during the June buy cycle as mills sought to correct inventory levels.
Most deals were completed early in the week in the direction noted above. Toward the end of the week, however, discounted offers of $5-10/gt ($5-10/mt) began to surface from a large national scrap dealer, thereby showing the potential for downward pressure on scrap prices in August. Several sources dismissed the long-term effect of the offers into August while others realized the potential supply overhang could result in downward pressure of $5-10/gt ($5-10/mt) on cut grades in August which could lead to sideways pricing on busheling.
With the latest ex-US scrap export deals to Turkey at $343-348/mt CFR on HMS I/II 80:20, sources inform SteelOrbis that the lower export pricing along with lower domestic offers on cut grades are expected to place some downward pressure on the US domestic scrap market in August. A source noted, “With prices to Turkey moving down, some struggle by many countries, including India and Turkey, in placing finished steel product in the export markets, and mills hedging in the US as the price increases seem to likely need to be tamed, a slight correction in the US domestic scrap market is likely.” A second source added that “a slight correction may be in sight for August, but drastic price changes are not expected as demand in US remains strong.”
Additionally, with scrap dealers’ cost structures under pressure with zorba (a non-ferrous product that is obtained by scrap dealers as part of the recycling process) income declining, ferrous scrap feedstock prices may need to be adjusted downward. The downward pricing, though, is likely to reduce incoming scrap feedstock which will tighten ferrous scrap supplies and help support prices in August to limit the downward pressure resulting from the export effect.