Negotiations for the US domestic scrap market in July began on Wednesday, with some confirmed sales of prime grades, P&S 5ft, and machine shop turnings (MST) at sideways in the Midwest. Some of the prominent mills in the region are trying to push down HMS I by $10/gt as was projected in past weeks; this is due to reportedly robust supply levels and a weak export market on both coasts. Some mills are even trying to purchase shredded down $10/gt from June settled prices but are encountering even more resistance, as some sales for the grade have already been reported at sideways.
In the case of shredded, some participants report that it is actually shredder feed that is dragging down finished “frag”. As zorba prices have fallen recently by ¢15/lb, some recyclers with shredders onsite look to reduce the cost of their inflows. Shredder feed is reported to be going down by $10/gt in the Midwest.
Information has been flowing more slowly from the South and Southeast, with some mills in the latter region reporting that they are waiting to see how the market develops. In the South, some mills reported that they acknowledge the predominantly sideways trend but will still try to push down prices for any grade, even if minimally, in the $3-5/gt range if that is all the market will allow. Preliminary projections have the Western regions showing the only predominantly bearish trend in the country, with a $10/gt decrease expected on all grades, compared to June prices.
Steel helps scrap in July
The general consensus is that scrap consumption is still at a good pace across the US, and there is no need to disrupt the market stability that has lasted four months for prime grades and three months for cut grades, with minor exceptions across grades in regions during this time.
The installed capacity utilization rate for the US steel sector had been enjoying rates above 80 percent from the week of May 2 through Jun 20. The rate dipped to 79.8 percent for the week of Jun 27 but returned to 80.4 percent last week. Rebar prices have reached a four-year high at $930-950/nt ex-US mill, the highest since October 2022. Yet, interestingly, rebar imports increased annually by 89 percent in May as finished steel prices keep climbing. It was surmised by some contacts that steel could only grow so much before Asian imports started to pour into the US at a faster pace. Contacts in the steel sector have started to report more rebar imports from Malaysia and Vietnam.
Other steel products that have been growing in price relentlessly are not seeing the same effects, though. Hot-rolled coil (HRC) imports in May were down by 37 percent annually, while wire rod decreased by 30 percent during the same period. It could be that in the case of these two products, there is still room for price growth, which could continue to support scrap prime grades’ prices for the rest of the year. HRC prices grew by $20/nt this week to $1,158/nt ex-US mill.
Export market keeps pushing down
The export market, on both coasts of the country, continues to be one of the main factors pushing scrap prices down, particularly cut grades. This week, prices in the US West Coast (USWC) fell by $10/gt, and already exporters are talking about decreasing prices a further $10-20/gt next week. Announcements of price reductions at the USWC docks usually take longer than what is originally stated, but they do come to fruition sooner or later. All this while containerized prices from USWC keep falling as well; this week, the price of HMS I/II 80:20 fell to $310/mt FAS Long Beach port from $320/mt FAS, and contacts are already talking about a possible $295/mt FAS by Monday.
On the East Coast (USEC), the Turkish import market has also suppressed export prices and prices to the docks. Turkish mills are buying cautiously as its domestic steel market has been soft recently. USEC dock prices fell by $5/gt this week as HMS I settled at $255-260/gt delivered New York and Philadelphia export yard, compared to $270-290/gt delivered on Jun 9. Surprisingly, some of the preliminary reports from contacts in the Philadelphia market indicate they are seeing confirmed sales of both cut grades, HMS I and P&S 5ft, at no change from June settled prices.
