US domestic scrap prices plummet in June

US domestic scrap prices plunged $50-$70/lt across all grades and regions in the beginning of June, and prices are anticipated to soften further as the month progresses. As May came to a close, the consensus that domestic scrap prices would fall this month was unanimous, with most predicting drops of approximately $30/lt across all grades. However, when mills entered the scrap market at the beginning of last week, scrap dealers told SteelOrbis that initial offers were at down $50/lt from early May. However, prices continued to fall in the following days, and by the time prices finally settled on Thursday, prices in both the Midwest and East Coast had fallen an average of $50-$70/lt.

Busheling prices took the biggest hit, falling about $70/lt in regions such as Philadelphia. Busheling oversupply was one factor contributing to the drop, which was exacerbated by one major mill purchasing little domestic busheling the last couple months and opting for pig iron (pig iron is currently being offered at $455/mt CFR NOLA, compared to $480-$490/mt two weeks ago) and scrap from the CIS, and many mills buying less scrap this month altogether due to planned outages. Further, with flat rolled prices falling dramatically the last couple months, the spread between US domestic hot rolled coil spots and busheling prices had become too wide for mills to be profitable. At least one major Midwest mill did not enter the market for shredded and HMS I this month either, and many others cut back purchases due to planned outages in June and overall lackluster demand. Significant drops in export prices and export activity only added to the downward pressure on prices this month. Additionally, some industry insiders have indicated that because prices are expected to fall again in July, many dealers sold off more scrap this month in order to be able to take less of a hit the next month.