US domestic scrap prices settle lower than expected for September

The US domestic scrap market was slow to settle in September, with prices pushed down lower than mid-August expectations. Following the Labor Day holiday, domestic mills were slow to enter the market to purchase September scrap. Scrap dealer sources explained that mills appeared to buy heavy in July, which led to a scrap overhang in August that spilled into September. The scrap overhang, particularly in the Midwest, coupled by strong scrap flows throughout the summer months, resulted in the supply of scrap outweighing demand levels.

Prime scrap grades were expected to be the strongest in September, but the weakness in shredded in HMS I scrap dragged the price of busheling slightly lower in the Midwest, where busheling scrap prices trended sideways to down $10/lt, shredded scrap prices fell $10-$15/lt and HMS I prices dropped $10/lt.  Meanwhile, East Coast scrap prices settled at sideways prices for busheling, down $10-$20/lt for shredded scrap and sideways to down $10/lt for HMS I. It's too early to predict the October market for now, but East Coast scrap dealers contend that next month's price direction will be impacted by whether or not Turkish mills renew their interest in US scrap exports this month as Turkey has been especially quiet in the last few weeks.