Market sources: US April scrap trend a matter of “wait and see”

Thursday, 18 March 2021 10:17:57 (GMT+3)   |   San Diego
       

In our last report a week ago, SteelOrbis sources were largely mixed on their views for April; some predicted US scrap prices would settle at plus $10-$20, while others believed that prices would stay sideways. This week’s sentiment is still “all over the map.”

For example, on one hand, a small number of sources are still pegging the market at up $10-$20/gt. 

“We don’t think there’s going to be enough feedstock to reach a surplus level,” a source said, adding that scrap prices in Texas trended at sideways this month. “I think we could see an uptrend in Texas, and there’s some speculation that SDI might start to buy some scrap this month.”

Operations at SDI’s Texas-based, $1.9 billion steel mill are scheduled to start this summer, the source added, noting that “no one would be surprised” if the mill started to build scrap inventory.

On the other hand, others now believe that scrap prices could trend down by $10-$20/gt.

“My sense is that we’ll see a slight reduction in [HMS, shredded scrap and P&S scrap] prices, but I think busheling will stay the same,” another source added. “Yes, there is less prime grade scrap being produced, because the automakers have slowed down because of the microchip issue, but even if busheling scrap prices go up, that’s not going to generate any more prime scrap. I think busheling [prices] will be sideways.”

An East-coast source agreed with a predicted downtrend.

“Export cargo prices off the East coast are down somewhere in the range of $20-$25/gt from their high, and now that scrap inflow has started to increase, dock and yard prices are dropping on the East coast because of what’s been happening in the export market,” he said. “Over here, we think the market could be down by $10-$20/gt next month.”

A third pocket of sources think the market will remain sideways. The rationale behind this train of thinking, is directly linked to finished steel prices and “mills’ record profits.”

“Everyone sees what’s going on with steel prices, and the [scrap] yards aren’t stupid,” an Ohio Valley-based source said. “If the mills try to take prices down, I think there’s going to be a lot of blowback.”

Another source offered his thoughts on the matter. “If you look at what’s going on with hot rolled, and you see the news that Nucor is saying they’re having their best quarter in more than a decade, and how SDI is talking about record profits, if the mills try to take pricing down, if any of the yards have any real stones, they won’t be selling at down,” he said.

“Nobody has any clue what’s going on,” a final source added. “Some of the scrap yards I talk to say their inflow is OK, others are saying they’re slow.”

For now, the most prominent opinion is that April prices for secondary grades will trend down from March settled prices, but as one source put it last week, “a lot can change in two weeks.”


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