US domestic scrap prices settle down lower than expected in September

After continuous downward price movements for the four previous months, the US domestic scrap market finally increased $20/gt ($20/mt) in August. Expectations for September were initially soft-sideways, but as the reality of lower prices in the export market to Turkey surfaced in mid-month, scrap sellers adjusted expectations of fully losing the previous month’s gains.

The Turkish import scrap prices continued to decrease through the end of the month along with a soft US domestic finished steel market. As a result, US mills placed aggressive bids that cut prices of shredded scrap by $30/mt to $33/mt and prime scrap by $40-43/mt. A source informed SteelOrbis that scrap sellers offered little resistance and accepted offers.

Sources report that export supplies did not substantially move inland as a gap of $5-10/gt ($5-10/mt) still remains making local scrap more advantageous for mills. A further drop in export prices along with limited export volumes through September, though, could reduce the cost gap and allow for some export volumes to compete in the domestic market in October. Although, sources note additional considerations exist beyond price when both mills and export companies are seeking to incorporate such rail loads in their respective business models. 

Looking towards the October scrap trading week, a source noted expectations of sideways movement on scrap prices. Supply of scrap is expected to remain adequate in October, especially, from urban regions, despite lower prices at the scales and docks. Winter season is expected to support prices in November and December.

*Denotes change in mt compared to the previous month. The top number in comparison to the bottom of the ranges and bottom number in comparison to the top of the ranges.