This week’s poll of SteelOrbis scrap market insiders reveals most think January US ferrous scrap pricing could settle $20-40/gt ($20-41/mt) higher during monthly scrap supply negotiations, which could begin next week following the New Year holiday.
While responses to the weekly SteelOrbis scrap market poll remained limited because of the ongoing US Christmas and New Year holidays, the weekly market expectations remained little changed, except that fewer respondents expect steady or flat January pricing against December levels.
Last month, US average scrap prices settled $10-20/gt ($10-20/mt) higher amid cold weather in the US Midwest and Northeast regions that reportedly hampered operations, even as market insiders reported improved export sales from the US East Coast, causing monthly scrap prices to move $10-20/gt ($10-20/mt) higher across all scrap grades.
“Some of my US (contacts) are saying plus $20/gt on cut grades (HMS and P&S), while up $30-40/gt is possible for primes (busheling and turnings),” said one US Midwest scrap insider. “I’m hearing that another bump in pricing is possible for February,” he added. “That’s pretty much the extent of the bullish run for ferrous (scrap) in the US for the foreseeable future.”
Insiders told SteelOrbis harsh winter weather across the US Midwest continues to limit scrap production capacity, even as demand is expected to improve next month as mills seek to restock inventory via “important purchasing programs”.
“We’re hearing up $20-30/gt for January,” another US Midwest mill-based scrap insider reported to SteelOrbis. “With the holidays in full effect, there’s really very little new to report on January scrap,” reported yet another US Midwest scrap broker. “I’m thinking we’ll be up $20/gt across the board.”
Based on an average $30/gt potential increase, Midwest shredded scrap pricing is seen settling as high as $415-420/gt ($416-421/mt) delivered to mill, while busheling scrap which gained $10/gt during December negotiations, could settle near $425-435/gt ($431-441/mt) if higher expectations for January prove true. In Ohio Valley HMS and P&S grades, a $30 average January price increase could net settled prices at near $365-385/gt ($370-390/mt), and $401-411/gt ($396-407/mt), respectively, on delivered to mill basis.
In the US Northeast, scrap insiders said a continuation of recent increased export demand could boost January scrap values as importers buy an increased amount of US supply towards February scrap requirements. January shredded grades are seen potentially up on average $30/gt on a delivered to mill basis from $20/gt higher December settled prices at $365-375/gt ($371-381/mt), while busheling scrap could settle on average $30/gt higher at $380-400/gt ($385-405/mt). For cut grades, a $30 increase would net January settled prices near $345-350/gt ($351-355/mt) for HMS I/II, while P&S scrap could settle $30 higher near $330-340/gt ($335-345/mt).
Much of the anticipated January scrap and finished steel price increases, insiders said, could depend on whether National Weather Service short-term forecasts for an increased amount of cold and snowy weather in the US Midwest and Northeast regions proves true, and whether US mills, following a December scrap price increase, have much of an appetite left to absorb the additional cost of higher January scrap given a normal seasonal drop in demand. Additional steel production price increases, scrap insiders say, could net additional finished steel price increases that could encourage another influx of imports early in the new year.