The October buy cycle is more than two weeks away, but sources close to SteelOrbis say that an anticipated direction for scrap prices has finally begun to emerge.
“We think busheling scrap is likely to come down, while other grades will probably trade at sideways,” sources said, adding that in some regions, scrap prices may soften by $5/gt on certain grades. “No one is expecting any big declines on cuts and shred going into October. Some yards have some excess scrap but others do not, so that’s creating a bit of a balance. We don’t see a bunch of yards’ inventories tilting toward excess.”
Other sources said they have a similar line of thinking.
“There is a lot of talk that the spread between busheling and cut grades is too big,” a Midwest-based source noted. “I also know that some of the mills are leaning more toward pig iron, which could also help drag busheling scrap prices down. But, on the other hand, the situation with automotive production is still a little hazy with all of the [automotive factory] shutdowns and production delays, so that also needs to be considered because less busheling is being produced.”
A third source said that while he’s heard rumors that busheling scrap could come down by as much as $40/gt in the Midwest, “I don’t know if I can buy into down $40/gt on prime just yet. If I’m a [finished steel] consumer and I see [prime grade scrap] come down by $90/gt in the course of two months, I’d be starting to ask about whether I should be getting a reduction in [finished steel] pricing.”
“I don’t know if I believe that busheling scrap will come down by that much next month,” a final source said. “If they want to buy my busheling at down $40/gt, but I think there’s going to be a possible rebound in December and January, which I do, I’m not going to be selling a lot of it in October.”