US domestic scrap prices expected to soften again in June

The downtrend in US domestic scrap prices is not yet over, sources say, noting that while some predict that prices could fall between $20-$30/gt next month, others think that down $40-$50/gt is plausible.

Ongoing downticks in pig iron prices, coupled with still-healthy scrap inflows into domestic scrap yards are among the factors placing downward pressure on the market.

“When Russia invaded Ukraine I think the entire world thought there would be this massive shortage of pig iron and that drove everything up,” a source said, noting that in March, ex-Brazil pig iron shipments into the US topped $1,000/mt CFR into the Port of New Orleans.  Earlier today, on the other hand, SteelOrbis reported that following an ex-India booking into the US at $800/mt CFR, Port of New Orleans, that US steelmakers are trying to negotiate future bookings in the range of $730-$760/mt CFR.

“I think what we’ve all realized since then is that the global supply chain for pig iron is a lot more resilient than anyone thought it was going to be.”

Scrap cargo prices into Turkey have also been falling. For example, whereas in mid-March, HMS I/II 80:20 cargos into Turkey were transacted in the range of $645-$662/mt CFR, depending on the country of origin, today, it’s been rumored that an ex-US booking for HMS I/II 80:20 was concluded at $460/mt CFR.  An Istanbul-based source said that Turkish mills are likely to try to push prices down to $440-$450/mt CFR in future transactions.

A second US-based source agreed that domestic scrap prices are likely to come down next month.

“Prices for everything- pig iron, scrap, steel, you name it, were driven up solely based on panic,” he added. “The market overheated and now it’s time for the market to readjust.”

Others, however, believe that “across the board” downward pricing is unlikely.

“I think primes may be down by more than secondary, especially if you take into account that in the Ohio Valley, there’s still a $200/gt spread between busheling and shredded scrap,” a Midwest-based source added. “That has to start narrowing.”

Some believe that busheling scrap prices, which are currently $175/gt higher than they were in February, could continue to soften into July.

June’s buy cycle is expected to start in approximately two weeks.  Ohio Valley settled prices, for February and May, are listed in the chart below.