The outlook for September US scrap pricing next month remained unchanged for a third week at sideways to potentially lower this week as a result of continued reports of low flat steel pricing as well as new reports that September-November mill maintenance programs could further limit local mill scrap buys during the September buy-cycle negotiation period next month, market insiders told SteelOrbis. Reports of a continued prime scrap “overhang,” the result of reduced mill purchases of prime scrap during August supply negotiations continued, but to less an extent than were heard the week prior.
“We’re expecting to see scrap coming off a bit in September as supply is steady although demand is likely to fall as a result of the annual mill outage season,” remarked one US Midwest-based mill scrap buyer. “We’re not expecting anything dramatic, but, we could see prime scrap trade off between $10-20/ton.”
“There’s really not anything new out there on the consensus for September scrap” said another Gulf Coast scrap insider. “We’re seeing the status quo, as there appears to be some downside pressure on primes. We’ll see if that happens, but, all other grades are anticipated to trade sideways to August.”
One US East Coast scrap insider begged to differ on reports of a continued prime scrap supply overhang in his local scrap region.
“I would agree that September scrap could settle soft-sideways next month on low demand,” he said. “But, I personally haven’t seen a lot of supply overhang for busheling.”
Insiders told SteelOrbis in earlier reports that US mills didn’t buy the prime scrap that local scrap suppliers had expected them to purchase during the August buy-cycle because threatened 50 percent tariffs on Brazilian pig iron by US President Trump failed to occur. An insider remarked “I think mill closures across September, October and November will create significant downward pressure on pricing during the September and October buys,” he said last week. “Especially with the expectation of a continued bearish export market and the softness in hot-rolled coil pricing.”
This week, US Midwest flat steel pricing continued lower amid reports of trades done at $5/nt less on average $820/nt ($904/mt), or $41.00/cwt., off from an average $820-$830/nt ($904-915/mt), or on average $41.25/cwt., seven days earlier. Flat steel insiders said HRC pricing could be nearing a bottom at about $800/nt ($882/mt) or $40/cwt., as reports emerge of improved domestic demand seen by mills.
“We see positive things regarding demand,” said Nucor Corporation Executive Vice President of Sheet Products, Noah Hanners, at this week’s SMU Steel Summit conference in Atlanta, Georgia, when asked about this week’s Consumer Spot Price (CSP) increase for hot-rolled coils, the first reported by the key US mill in three weeks to $875/nt ($965/mt) or $43.75/cwt. “This week’s price increase has nothing to do with tariffs at all, but rather we see a developing backlog of orders coming from customers, which is supportive of demand.”
Another SteelOrbis flat steel contact remarked, “There is a mix of opinions in the marketplace right now, however, there is a general feeling that demand is going up in certain sectors as people return from vacations,” he said. “The mills definetly have felt an increase of volume on quotes, but companies are looking for lower prices and mills are not closing orders,” he added. “Scrap values are staying the same versus prices that are coming down, so that is reducing margins with the mills. To me it feels like HRC prices will not decline below $800/nt.”
Given this week’s continued declines in spot flat steel pricing, SteelOrbis historical data shows price levels have declined consistently since the end of June as scrap demand has remained unremarkable with sideways pricing reported for three straight months.
Based on a sideways to down from August, September settlement, US Midwest prime busheling scrap in the Ohio Valley could settle at or below $435-460/gt ($443-468/mt), while shredded scrap might settle at or below $375-380/gt ($381-387/mt). Ohio Valley P&S and HMS grades are seen at or below $361-371/gt ($367-377/mt) and $325-345/gt ($330-387/mt), respectively, scrap insiders told SteelOrbis.
In the US Northeast, a sideways to potentially lower September scrap settle would put prime busheling grade material at or below $380-400/gt ($387-407/mt), while shredded grades could settle at or below $325-335/gt ($330-342/mt). P&S and HMS grades might finish at or below $295-305/gt ($300-310/mt) and 305-320/gt ($310-325/mt), respectively, scrap insiders told SteelOrbis this week.