Sources close to SteelOrbis say they’re still a little baffled that most US domestic scrap prices settled at sideways this month, especially in that most sellers believed that prices were going to trend upward.
“Everyone thought that prices were going to be up $20/gt across the board, so mostly sideways came as a surprise,” a Midwest source added. “Not to mention that there’s no busheling out there. It’s really hard to come by and I almost wonder if [busheling prices] should have gone up more.”
Other sources are equally puzzled by this month’s price trend.
“There are still a lot of yards that owe on May and June orders, and with all of the people who are backfilling old orders, you have to wonder what percentage of scrap that’s being shipped today, was booked for July,” a source said.
Trucking, rail, and shipping is also still a challenge, another source added, noting that “freight is still tight and availability is still hard to come by.”
As far as how pries could trend in August, there are several factors at play. On one hand, US finished steel prices, which SteelOrbis has consistently reported are at record highs, continue to break those records week after week. Finished steel demand is still strong, spot market tons are hard to come by, and buyer activity is rampant.
On the other hand, scrap inflows are good. “Flows are a lot better for cut [grades] and shred, and the shredders are getting a lot more feed,” another source added. In some places, shredders are dropping their peddler prices between $5-$20/gt, because they’re being inundated with scrap.
A third thing to keep an eye on relates to scrap export activity off the East coast. Earlier this week, SteelOrbis reported that the most recent ex-US cargo sold to Turkish steelmakers, for 22,000 mt of HMS I/II 80:20 scrap, was transacted at $485/mt CFR (against $496/mt CFR for HMS I/II 80:20 on July 7). The HMS dock delivered price on the East coast has also widened by $5/gt on the bottom end since our last report a week ago, from $390-$395/gt on Thursday, July 8, to a range of $385-$395/gt, today.
For now, the price trend for August is uncertain. Whereas at the beginning of the week, some people predicted the market would stay sideways, today, a growing number of people are speculating that the market could come down by as much as $20-$30/gt “when the dust settles.”
“Based on what the mills’ needs are, I have a hard time understanding how they can take the market down,” a final source said. “I also have a hard time understanding how [the mills] will be able to keep passing through price increases if they take the [scrap] market down. Nothing about the market makes sense right now.”