The US domestic scrap market has its eyes set to May, as buys are expected to start rolling in next week.
Sources in the East Coast/ Philadelphia regions say that while US export prices to Turkish mills have firmed in recent weeks, that may or may not help stabilize local markets, especially with the approach of the Ramadan holiday. “A lot of what’s going to happen in May will depend on US mills’ scrap inventories and what’s going on at the export docks,” according to one source.
Philadelphia region prices, which were at $230-$235/lt for HMS I/II and $240-$245/lt for shredded scrap during the month of April, could trend down by about $5/lt, although others peg the market at sideways. “We’d be happy with sideways,” another source reported.
The Chicago markets are expected to trend at sideways, with prices holding at $220-$225/lt for HMS I/II and $240-$245/lt for busheling scrap. Sources in that region point to the US flats mills’ recent price increase announcement, noting that local yards are not likely to accept lower price points “unless they absolutely need to sell because they need the cash flow.”
The Pittsburgh / Cleveland area markets are slightly more wobbly, with sources noting that some mills have indicated they’d like to take the market down $10/lt from April levels, which were at $230-$240/lt for HMS I/II and $260-$265/lt for P&S scrap.
Sources also report that there is “plenty of scrap inventory in the Southern markets” due to a drop in finished flat rolled steel demand, which ties into low oil prices, falling rig counts and reduced demand for energy pipe. “The weather is good, demolition is good and at this point, those yards will be happy if the markets trend neutral.”