Sentiment within the US domestic scrap market largely mirrors what was reported last week: most sources polled still believe that busheling scrap prices (in most regions) are likely to trend down next month by $20-$30/gt, whereas prices for HMS, shredded, and P&S scrap are expected to hold at “mostly sideways.”
“Pig iron is relatively cheap right now compared to [busheling scrap],” a source said, noting that he believes that if mills can buy more pig iron at less money, that’s likely to impact busheling prices.
For example, earlier today, SteelOrbis learned that US import pig iron from Russia is being heard at $542/mt CFR at the Port of New Orleans, which sources note is still more attractively priced than September settled busheling scrap prices in the Ohio Valley and the Southeast, "even after you calculate the cost to get it unloaded and shipped to the mills.”
(Freight costs into mills in Indiana and Ohio are currently estimated at $40/gt, whereas freight costs into mills in Arkansas and Missippi are estimated at $30/gt.)
Another source agreed.
“Right now I’m calling the market down on prime, without much fluctuation one way on the other on cuts and shred,” an East coast-based source added. “Flows are still pretty good and yes, there’s inventory in the [scrap] yards, but what you see that’s in there, most of it is already sold. It’s a matter of getting it out [to the mills] because everyone is still dealing with transportation issues. Prices at the docks seem to be level and business in general, for steel and for scrap seems to be pretty good right now.”
Other sources, however, have said that they see some tightness in cut grades and shredded scrap, adding that they believe this could push prices up next month.
“I’ve heard a few people mention that, but if prices do go up, I don’t think we’ll see things going up $20-$25/gt,” another source said. “Would I buy into up $5/gt, or maybe up $10/gt? Maybe. But with prices where they are, that type of fluctuation really doesn’t mean much."
A final source said he’s mostly waiting to see how things pan out.
“Basically, all I have to add is ‘here we go again.’ Scrap flows are still okay, everyone is still dealing with transportation issues, and it seems like a lot of the yards are comfortable with their flows,” he said. “Are we at the bottom? Maybe. I’m not ready to call that just yet. But I do think we’ll see mostly sideways movement on cuts and shred next month, with primes having the potential for the largest downside.”