While its early, following the recent higher December scrap settles, January scrap is seen continuing the recent higher trend for US domestic scrap, market insiders told SteelOrbis late this week.
Earlier this week, December scrap settled $10-20/gt ($10-20/mt) higher across all US grades on a delivered to mill basis amid late reports of improved domestic mill demand for scrap and better US East Coast export interest in domestic material that is likely to continue into the first month of the new year, scrap market insiders told SteelOrbis.
“The talk from good sized shredders in Ohio is up $50/gt for January because the weather is bad and its [crazy] cold,” said one Midwest scrap supplier. “It’s a bit too early to tell, but, of course all the dealers are predicting up in January, but, it can’t be up as much, given that December [already] traded $20/gt higher,” said another Midwest-based scrap insider. “There seems to be a lot of optimism for next year in general,” reflected another scrap market insider. “I would guesstimate that January should be up [more than $30/gt],” he said. “We see it sideways to slightly higher,” said another mill-based scrap buyer. “We’re hearing up $20/gt possibly they are already saying, but who knows,” said a final Midwest-based scrap supplier.
Based on a somewhat conservative though extremely early $30/gt January increase for Midwest shredded scrap pricing, the grade is seen settling at $415-420/gt ($421-425/mt) delivered to mill, while busheling scrap which gained $10/gt in December, could settle near $425-435/gt ($431-441/mt). In Ohio Valley HMS and P&S grades, a $30 average January price increase could net settles near $365-385/gt ($370-390/mt), and $401-411/gt ($407-417/mt), respectively, on a delivered to mill basis.
In the US Northeast, scrap insiders said a continuation of increased export demand could boost January scrap values as importing nations buy more US supply towards increased February shipments. January shredded grades are seen potentially up on average $30/gt on a delivered to mill basis from $10/gt higher December settles at $365-375/gt ($371-381/mt), while busheling scrap could settle on average $30/gt up near $380-400/gt ($385-405/mt). For cut grades, a $30 increase would net January settles near $345-360/gt ($351-365/mt), for HMS I/II, while P&S scrap could settle $30/gt higher near $330-340/gt ($335-345/mt).
As December scrap was preparing to settle, forecasts for sharply higher scrap pricing began to emerge between December ab d the start of February trade as a result of reports of dwindling inventory and forecasts for cold and snowier weather this year as a result of a developing La Nina weather pattern that will focus on the upper Midwest, the Great Lakes region and parts of the Northeast.
The US snow belt is a region known for heavy snowfall, primarily in areas to the south and east of the Great Lakes, parts of western New York, Michigan, Ohio, and Pennsylvania, where cold air picks up moisture from warmer lake waters and deposits it as bands or belts of heavy snow.
