The market sentiment for US scrap ahead of the Christmas and New Years holidays remains positive early this week, though trading was reported to be “extremely dead,” market insiders told SteelOrbis this week.
Last week, SteelOrbis reported a continuing steady to upward price trend following the week prior’s December buy-cycle settles which saw scrap prices up $10-20/gt over all domestic ferrous grades. Last week, January expectations pegged next month scrap at sideways to as much as $40/gt higher.
December scrap pricing rose amid reports that supplier inventories were more limited than prior months because inflows dropped as a result of recent cold and snowy weather in the US Midwest, even as US mills purchased more scrap in December as steel production facilities returned to operation following the completion of annual maintenance operations. Improved export scrap sales also boosted requirements for US East Coast supplies, they said. Much of the same bullish fundamentals remain in play for January scrap, insiders said.
“There’s really not much in the way of new chatter on the scrap market this week,” claimed one Midwest scrap market insider. “We’re still hearing sideways to up $20/gt across the board. Maybe slightly more could be realized for prime grades.”
“We are still hearing up slightly on scrap for January,” said another mill-based scrap insider. “Probably up $20/gt is what most people are thinking, however, the markets are going to remain quiet until the first week of January.”
Based on a sideways to $20/gt potential increase, Midwest shredded scrap pricing is seen settling as high as $405-410/gt ($411-415/mt) delivered to mill, while busheling scrap which gained $10/gt during December negotiations, could settle near $415-425/gt ($421-431/mt) if higher expectations for January prove true. In Ohio Valley HMS and P&S grades, a $20 average January price increase could net settles at near $355-375/gt ($360-380/mt), and $391-401/gt ($396-407/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 importers buy an increased amount of US supply towards February scrap requirements. January shredded grades are seen potentially up on average $20/gt on a delivered to mill basis from $10/gt higher December settles at $355-365/gt ($361-371/mt), while busheling scrap could settle on average $20/gt higher at $370-390/gt ($375-395/mt). For cut grades, a $20 increase would net January settles near $335-350/gt ($341-355/mt), for HMS I/II, while P&S scrap could settle $20 higher near $320-330/gt ($325-335/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 with the Christmas and New Years holidays starting this week. Additional steel production price increases, they say, could net additional finished steel price increases that might encourage another influx of imports.
