This week’s expectation for US scrap pricing for the month of April remains locked in a sideways to down trend for now going on a third week, though some insiders told SteelOrbis continued war-related increases in energy costs and freight rates on US East Coast export scrap grades could largely determine the extent of potential domestic price declines.
With freight rates between the US East Coast and Turkey hovering around $10 per metric ton (mt) higher thus far, insiders said many overseas buyers remain disinterested in East Coast export HMS 80:20 scrap grades, recently offered at $390/ton CFR.
Prior to recent hostilities, freight rates between the US and Turkey averaged about $37-38/mt, insiders said. Unattractive export pricing, they added, could potentially bottleneck US scrap at East Coast yards, or cause Midwest inventory to boom, as local scrap gets re-directed to busier markets there. As a result, some insiders told SteelOrbis East Coast suppliers are cutting collection prices at local yards as they see “little opportunity to conclude transactions at current prices.”
And, as the SteelOrbis weekly US scrap report went to press, the price of benchmark spot Brent crude oil stood at more than $110 per barrel (/bbl) following tit-for-tat missile and drone attacks on Middle East energy infrastructure assets by both Iran and Israel.
“The April scrap market is still trending down,” remarked one US Midwest mill scrap buyer to SteelOrbis. “The export market looks weak on volume, with prices up some to offset higher freight rates.”
As the US-Israel-Iran war entered its 20th day, commodities pricing in futures markets reflected heightened levels of uncertainty with the potential for further strain on global supply chains likely. Here in the US, domestic energy markets remain more sheltered, insiders said, as the US only imports about 1 percent of its oil needs from the Persian Gulf. And though elevated by more than 30 percent from when the war started, the current price of US benchmark West Texas Intermediate (WTI) crude oil remains below $100/bbl, as the US remains a net exporter of crude, they noted.
“Demand at the mills is good, and scrap supply at the dealers is adequate,” remarked another US Midwest scrap broker. “As a result, it wouldn’t surprise me to see another sideways market in April.”
“We see [April] shreds and cuts down a bit,” told another US Midwest mill scrap buyer to SteelOrbis. “Even with primes, I just don’t think there’s any chance of prices moving up.”
Another contact told SteelOrbis continued high energy and freight costs will be key in determining the price of April scrap.
“Most people are calling April sideways to down,” the US Midwest scrap insider said. “A lot of it will depend on how buyers and sellers view the continued uptick in energy costs.”
This past week, insiders told SteelOrbis they noted better weather-related scrap inflows into local collection yards, though, “On the export side, scrap destined for Asian markets was quoted about $30/gt higher because of increased shipping rates.”
Based on a sideways to down expectation for April scrap, US Midwest local busheling and shredded scrap grades could settle on a delivered to mill basis at or below $445-455/gt ($452-462/mt), and $445-450/gt ($452-457/mt), respectively. P&S and HMS scrap might settle on a delivered to mill basis $10-20/gt less at $406-416/gt ($412-423/mt) and $370-390/gt ($376-396/mt), respectively.
