For the bulk of September, scrap yards, traders and buyers largely held that US domestic scrap prices would trade downward in October. And as of late last week, the consensus was that the market was likely to settle somewhere between $10-$20/gt ($10-20/mt) below September prices.
But expectations shifted downward quickly on Monday, when it was heard that dock delivered prices on the US East coast had softened from $185-$190/gt ($188-$193/mt) FAS, to $165-$175 gt, ($168-$177/mt) FAS.
Now, some believe that October prices could shift downward by $20-$30/gt (20-30$/mt), while others think that down $30-$40/gt ($30-39/mt) may be likely.
“Trying to figure out where the market will settle is like trying to hit a moving target,” a source said. “Especially because we think the mills are going to take their time with planned maintenance outages because their business isn’t great.”
Another source agreed. “Weakness in export business is helping to drive the market down. Domestic finished steel prices aren’t doing great,” he said. “The auto workers strike is also having an impact, because if the strike isn’t settled by the time scrap starts trading, we’ve already heard that one of the mills would plan to buy less scrap. Make no mistake. Cancellations are coming. I don’t know if I’d go so far as to call it ‘Scrapmageddon,’ but I’ll let you know where I stand on that next week.”
Sources in the Ohio Valley say that while they’re less pessimistic, they also believe the market is going to soften more than initially expected. “When you don’t know where prices are going to land your mind can go wherever it wants to,” a source said.
“The only thing we can do is to get through October and see where the market settles,” another source added. “We’re hoping the market won’t come down by more than $20-$30/gt, although we’re really hoping it’s not down by more than $20/gt. At this point, it’s hard to say.”
Market players throughout the US further believe that if scrap prices trend down significantly, this may hinder scrap collection efforts, and that many scrap collectors will stop bringing scrap into the yards until prices become more favorable. Some scrap dealers have expressed concern that if this happens, they may be unable to fulfill mills’ orders in November.