The weekly US scrap price outlook for September was unchanged this week at sideways to potentially lower as a result of continued declines in flat steel pricing as well as new reports that a prime scrap “overhang” continues to exist due to the paucity of August trade, market insiders told SteelOrbis.
Insiders said mills didn’t buy the prime scrap that local scrap suppliers had expected them to purchase during the August buy-cycle because 50 percent tariffs on Brazilian pig iron threatened by US President Trump didn’t happen.
“Primes didn’t go down in August, though if the (supply) overhang persists in September, I suspect that prime scrap could decline,” the Midwest scrap insider told SteelOrbis. “I think September is looking sideways to down depending on grade,” he added. “Primes seemed to have overhang that could potentially push prices down in September some, while cuts seem to remain tight but sideways. Shred is looking sideways to down, as it could get dragged down by primes.”
Insiders added that mill closures for annual maintenance -that typically start in September and end in December- could also reduce mill scrap purchases during the September and October buy cycles.
“I think mill closures across September, October and November will create significant downward pressure on pricing during the September and October buys,” the insider added. “Especially with the bearish export market and the softness in hot-rolled coil pricing.”
This week, flat steel pricing is reported $5-10/nt less at $820-$830/nt ($904-915/mt), or on average $41.25/cwt. Flat steel insiders said scant mid-month demand and a growing outlook for sideways to lower September scrap is limiting upward price movement. SteelOrbis historical data shows flat steel pricing has 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.
SteelOrbis historical scrap data shows since monthly domestic scrap prices peaked in March ahead of much anticipated tariff announcements from the US Trump administration, the average price of Midwest Ohio Valley shredded scrap has slumped more than 24 percent from on average $506/gt ($514/mt) to $384/gt ($390/mt). HMS pricing in the US Northeast dropped a more conservative 22.8 percent during the equivalent period to on average $313/gt ($318/mt) amid somewhat limited export demand for US scrap.