Last week, market sources throughout the US believed that shredded, P&S, and HMS scrap prices would soften in the month of April. The reason for the anticipated downtrend, sources said, was directly tied to better inflows.
It was further believed that busheling scrap prices would hold at sideways, as slowdowns in auto production, due to global shortage of semiconductor chips, means less busheling scrap is being produced.
What’s notable, however, is that SteelOrbis has confirmed that one domestic steel producer has booked six cargoes of prime material, from the EU, for April/May shipment. Other European sources have said they’ve received inquiries for prime grades from the US, due to insufficient volumes in the US domestic market.
“This doesn’t surprise me,” a source concluded. “Primes will be very tight, and that mill has a big melt program for the next couple of months.”
Although one source said he believes that lack of busheling scrap in the domestic market could force prices upward, other sources disagreed. As such, the most commonly held belief is that prime grades will trend sideways.
As far as the anticipated price trend for HMS, shredded scrap and P&S scrap, sentiment is largely unchanged since our last report a week ago. A $20/gt downtrend is still expected.
“Here on the East coast, we’re already hearing about possible cancellations for previously booked shredded and cut grade shipments, which tells me that the mills are going to try to take prices down,” a source said. “We believe the market could come down $20/gt in April, but if the exporters take prices down more, we could see domestic [HMS, P&S and shredded scrap] prices come down a bit more.”
Sources in Chicago and the Ohio Valley agreed with a down $20/gt prediction, adding that they believe this month’s trading cycle “will drag out until next week, especially since most people will be off work on Friday due to the holiday.”
“I’d like to see the market hold sideways,” another source said. “When you see where prices are for new steel production, especially on flat rolled, I’m not sure why the mills would try to take the market down.”
Another source agreed. “With the way new steel prices are continuing to climb, I don’t think the drop lasts long or even sticks.”