As was previously projected by SteelOrbis, most mills in the US Midwest, including all the most significant buyers, have announced price reduction of $20/gt ($20.3/mt) for secondary grades from March settled prices, and a sideways trend for prime grades. Negotiations are ongoing.
Sellers are still resistant, and some were adamant that they would not sell below March-settled levels, but on Wednesday, some reported that they were starting to accept the broader trend. On the other hand, there has not been definitive confirmation of some mills' intentions in Texas and other Southern states to impose a $30/gt ($30.4/mt) price contraction on obsolete grades. Officially, only some buyers have been seen buying shredded scrap material in Alabama at $10/gt ($10.1/mt) from March prices, and that has been, to date, the only exception to the general trend.
Most participants, buyers and sellers, agree that flows are healthy. Buyers mentioned that sellers who refused to sell at down prices or requested a -$10/gt ($10.1/mt) price reduction would be turned away. Some sellers were confident that mills would obtain the volumes they needed due to an overabundance of scrap. Moreover, they pointed to reduced scrap demand in several markets due to the April scheduled maintenance shutdown.
Some markets are still developing. In Philadelphia, there have been no reports on how buyers are behaving, even though they have claimed they can purchase cut grades at low prices from exporters. Additionally, Philadelphia domestic mills are beholden to the export market, as exporters consume significantly more scrap than domestic mills in the region. On that note, even though the price of US-origin HMS I/II 80:20 reached $400/mt CFR Turkey this week, there is much uncertainty due to the ramifications on freight prices from the US-Israel-Iran war and the two-week ceasefire that has been reached. As oil prices fall temporarily, export prices could follow.
In the meantime, US domestic traders across the country believe that negotiations could be limited to this week and not extend to Monday. In conclusion, some deviations from the $20/gt contraction in shredded and cut grades’ prices, and sideways in prime grades, could be detected by region, but the trend is expected to settle for the most part across the US.
