Although scrap market sources remain mixed on their predictions for May pricing, they do agree that there’s “no downside” to the market. Conservative predictions put the market at sideways to up $5-$10/gt, whereas more bullish predictions put the market at up $20-$30/gt.
“I think the mills will be sideways to up slightly,” a Midwest source said. “They won’t be able to hold the new steel increases if they don’t drag us along so they can blame us [for finished steel pricing].”
For example, yesterday, SteelOrbis reported that US domestic hollow structural sections tubing (HSS) prices are now trending at $88-$89 cwt. ($1,940-$1,962/mt or $1,760-$1,780/nt), FOB mill, against a range of $74-$75 cwt. ($1,631-$1,653/mt or $1,480-$1,500/nt), FOB mill in late January. Current prices are “at least double” what the average price point was in mid-April 2020, when spot market prices were trending at $44 cwt. ($970/mt or $880/nt), FOB mill. Similar trends are being seen within other finished steel markets.
Another source agreed that May scrap prices will be sideways to slightly up.
“I think we could see the market hold at sideways with the potential for upward pricing for [busheling] scrap,” a Chicago-based source said. “The rationale for sideways is pretty simple—the mills are making record profits, so why would dealers give anything back? There’s no reason for the market to go down.”
Speaking of mill profits, earlier today, SteelOrbis reported that Nucor Corporation announced record Q1 net earnings of $942.4 million, against $398.8 million in Q4 2020. The company also said it expects earnings in the Q2 of this year to be the highest quarterly earnings in Nucor history, surpassing the record set in Q1.
“There’s no questioning the fact that the market isn’t going down, the question is how much the market will go up,” an East coast source said. “Over here, we think the market will hold at sideways to up $10-$20/gt. Based on what the docks have done, I’m thinking more up $20/gt.”
Although some non-scrap market sources have voiced concerns about lagging export sales to Turkey, adding that Turkish mills seem resistant to book US-origin cargoes at exporters’ current asking price, East coast sources have been quick to note that “there are countries in play other than Turkey.”
Ohio Valley sources also see firmness in the market.
“I believe we’ll be back to March levels on cuts and shred, and sideways on busheling,” another source added. “Demand continues strong and yard inflows are just OK. Export seems to be holding if not getting a bit stronger, and I believe that the mills will have difficulty getting their scrap programs covered in May. There aren’t any real inventories in the yards, and everyone just trying to generate enough scrap to complete April business.”