Ferrous scrap prices for the domestic market remained relatively stable after the July trading cycle. Prime grades trended sideways, as was projected since last month, due to healthy market fundamentals. Some obsolete grades, particularly HMS I and shredded, softened by $10/gt in some markets, particularly in the South and Southeast. These grades were impacted by adequate supply levels and an export market that has been softening for more than a month on both coasts.
Regarding expectations for August, market fundamentals remain strong, such as US steel prices continuing on the rise. The price of hot-rolled coil (HRC) has grown to $1,158/nt ex-works from $1,097/nt ex-works at the beginning of June. The installed utilization capacity rate for the US steel sector in June trended above 80 percent almost entirely, if not for a slight decrease to 79.8 percent during the week of Jun 27, according to data by the American Iron and Steel Institute (AISI). As of the last report, the rate dipped last week to 79.7 percent, but remains high.
Moreover, several car plants in the Midwest will enter maintenance shutdowns this month for a couple of weeks, which could reduce scrap generation from industrial accounts. The hot weather in July and August could impact scrap generation as well and tighten flows.
These positive fundamentals would presuppose an increase in prices for August, yet some contacts are wary of how the scrap sector has had to “scratch & claw” for mere stability while the steel sector has been booming. SteelOrbis recently reported on the apparent lag in scrap prices in the US compared to finished steel prices. There are no specific figures attached to possible, if any, decreases in August. Yet several other contacts believe the US scrap market will retain the relative stability it has enjoyed for prime grades for four months.
In July, prices for the Chicago domestic market remained unchanged for prime grades, with #1 busheling unchanged at $450/gt delivered consumer and #1 bundles at $455/gt delivered. HMS I fell by $10/gt to $355/gt delivered while P&S 5ft was unchanged at $400/gt delivered. MST was unchanged at $255/gt delivered. For shredded, some contacts reported selling the grade at a $10/gt price decrease from July settled prices, while others claimed it stayed unchanged; hence, the price fell by $5/gt to $425/gt delivered.
Some markets in the Ohio Valley were more stable, with domestic prices in the Pittsburgh and Cleveland remaining sideways across the board. While in the south, prime grades were sideways everywhere, with falls by $10/gt in some obsolete grades varied by market. As in the Midwest, nothing dropped by more than $10/gt.
In Houston, the price of #1 busheling remained flat at $410/gt delivered, while HMS I fell by $10/gt to $335/gt delivered. Contacts in the region claimed that some mills were able to buy P&S 5ft was unchanged at $360/gt delivered. Shredded also decreased by $10/gt to $390/gt delivered while MST was unchanged at $250/gt delivered.
USEC
As projected, Philadelphia was the market most affected by the bearish trend in the US East Coast (USEC) export market. There is ample material in the market available, and exporters are numerous and influential. All obsoletes fell by $10/gt in the domestic Philadelphia market, except HMS I, which dropped by $10-20/gt from June and settled at $330-340/gt delivered consumer. P&S 5ft settled at $370/gt delivered, shredded at $400/gt delivered, and machine shop turnings (MST) at $220/gt delivered. Some traders in the Philadelphia market mentioned that some mills were even trying to lower HMS I even more and purchase it below $330/gt delivered, but there were no confirmed sales below that level.
The USEC export market has been softening since the beginning of June; US-origin HMS I/II 80:20 has lost during this period everything it had gained from the end of February to the middle of May. By February 27, it stood at $371/mt CFR Turkey and is back again at $369/mt CFR on Thursday after reaching a high of $414.5/mt CFR. After the end of the Jul 15 Democracy Holiday, there have been rumors of new deep-sea deals to Turkey, yet the trend remains bearish. The export market remains weak for Turkish steel as domestic demand has not been strong either.
