US scrap pricing for the month of May is seen sideways to about $20/gt ($20/mt) less this week amid reports of increased scrap flows into domestic yards and as claims continue that limited US demand for finished steel has caused domestic flat and long steel pricing to peak, meaning mills might require less scrap during May supply negotiations, market insiders told SteelOrbis this week.
And, while it still remains early in the monthly scrap price assessment process, in the US Midwest, Ohio Valley prime busheling scrap is expected to settle at least $20/gt ($20/mt) less than its April counterpart.
“We’re seeing better weather for scrap deliveries and increased in-bound flows into local yards,” said one Midwest scrap insider. “(Lower pricing) on flows of HMS and other cut grades, are part of the continuing softness that we have seen over the last few months. As of right now, the call for Midwest cuts is sideways, while shredded scrap is seen slightly down.”
The insider said the current level of industry uncertainty remains high, especially for June scrap pricing, depending on whether a recent pull back in overseas scrap market pricing continues. June is also the month when increased US scrap purchases could occur as buyers in the US South will be procuring scrap to fuel output from the new 600,000 ton per year Hybar rebar mill located in Osceola, Arkansas.
“There’s so many uncertainties with the new tariff environment,” the insider said. “If the demand from scrap export markets comes back, it might result in less (domestic) tons being made available, which could be supportive for US prices.”
Recently, US prices for flat rolled coils have retreated as well towards $875-925/nt ($965-1,020/mt), or $43.75-46.25/cwt., about $35/nt less on the week. According to SteelOrbis data, HRC prices peaked at $950/nt ($1,047/mt), or $47.50/cwt., in mid-March and once again in early April.
“Buyers are sitting and waiting on additional HRC sales because there’s just too much uncertainty in the market right now,” said another flat steel insider.
Long steel markets, which use scrap as mill input, report “prices may have peaked for now,” with domestic rebar on an FOB mill basis is assessed with most transactions noted at $38.00-39.50/cwt. ($760-790/nt or $838-871/mt), on average $38.75/cwt. ($775/nt or $854/mt), unchanged from seven days ago.
“Buyers are taking a very conservative approach to buying steel at the moment,” said one SteelOrbis long steel insider. “With a recent decrease in purchases, domestic rebar and wire rod pricing has stayed very steady for several weeks now,” he said.
Based on a $20/gt decline estimate for May, prime busheling and shredded scrap for May delivery could settle near $445-470/gt ($452-478/mt), while shredded scrap could settle near $395-400/gt ($401-406/mt). Cut grades are currently expected to settle sideways for May meaning HMS1 could settle near $365-385/gt ($371-391/mt), while P&S scrap is seen flat to April values at $401-411/gt ($407-418/mt).
And while no concrete estimates are yet available for East Coast scrap grades, following on April declines, and considering recent declines in global scrap pricing, most insiders expect domestic scrap pricing for May to reflect similar declines seen during April supply negotiations, when levels were off between $20-40/gt ($20-41/mt).