This week, the market expectation for US scrap is sideways to $10-20/gt less, as insiders report minimal new demand for finished steel even though scrap inventories remain solid. This week’s market outlook differs from that reported seven days earlier, when expectations for June were more mixed.
“So far in Texas, we are hearing that expectations for June are unchanged,” remarked one Texas-based scrap dealer. According to scrap insiders, scrap and rebar supply remains high in Texas due to limited recent demand from mills and improved flows into yards as a result of higher prices paid to scrap sub-collectors.
The current sideways-to-lower forecast for next month comes amid expectations of increased demand for scrap starting in June, when more than 1.6 million tons of annual rebar production capacity will come online with the opening of three new rebar fabrication mills in the southern US. The Commercial Metals Company’s (CMC) 500,000-ton-per-year mill in Martinsburg, West Virginia; Nucor’s 430,000-ton-per-year micro mill in Lexington, North Carolina; and Hybar LLC’s 700,000-ton-per-year mill in Osceola, Arkansas are all expected to begin melting scrap in June.
“Yes, we have heard that June scrap could be down by as much as $20/gt,” said another Midwest scrap insider. “The new Hybar mill will produce salable rebar from billets in May and will start melting scrap in June.”
Based on a sideways to $20/gt lower June scrap call, US Midwest prime busheling scrap, which fell by $30/gt in May, could settle at $415-440/gt ($422-447/mt), while shredded scrap, which fell by $40/gt in May, could settle at $355-360/gt ($361-366/mt). Ohio Valley P&S and HMS grades, which saw $40/gt price drops in May, could settle at $341-351/gt ($346-357/mt) and $305-325/gt ($310-330/mt) respectively. In the US Northeast, prime busheling, which settled at $30/gt less in May, could settle at $360-380/gt ($366-386/mt), while shredded scrap, which lost $40/gt during May's negotiations, could settle at $305-315/gt ($310-320/mt). P&S and HMS grades, which saw declines of $40/gt in May, could settle at $275-285/gt ($279-290/mt) and $285-300/gt ($290-305/mt), respectively, according to scrap insiders.
According to SteelOrbis scrap data, since the peak of monthly domestic scrap prices in March, ahead of the much-anticipated tariff announcements from the Trump administration in the US, the average price of Midwest Ohio Valley shredded scrap has slumped by more than 24 percent, from an average of $506/gt ($514/mt) to $384/gt ($390/mt). SteelOrbis data shows that HMS pricing in the US Northeast dropped by a more modest 22.8 percent during the same period, reaching an average of $313/gt ($318/mt).