US domestic scrap prices likely bottomed after October drop

Mills were able to substantially push down US domestic scrap prices across the board in the October, but signs are already pointing to a reversal next month. There were a multitude of negative factors that pushed domestic scrap prices down during October buys, particularly reduced mill buying programs. A number of mills bought substantially less scrap or none at all this month, due to various maintenance outages. Additionally, finished steel demand in virtually all product lines, particularly for flat rolled products, has been tepid as of late and prices have declined substantially over the past month. As usual, the export market also took a toll on domestic prices--while export scrap activity to Turkey has been steady, even robust during some weeks, export prices are still soft. On the US West Coast, Chinese demand is essentially non-existent and even activity to Taiwan and Korea has been minimal.

Consequently, scrap prices in both the US Midwest and East Coast fell between $35-$60/lt in October, with prices in the Midwest once again taking the hardest hit (mill outages were largely contained to Midwest states). However, soon after prices settled, SteelOrbis sources indicated that a few major scrap companies were beginning to purchase large scrap tonnages at the lower prices, an indication that prices hit bottom in early October. The increased mid-month buying activity will slow scrap flow, according to one East Coast broker; and with dealers already beginning to hold on to scrap tons for the winter months, the likelihood of a November scrap increase is growing more pronounced.

US domestic scrap prices in early October were as follows: