Scrap market sources from throughout the US have said the market has been quiet—and that while predictions about where prices could settle are abundant, transactional activity has gotten off to a slow start.
“We haven’t heard anything yet, only crickets,” an Ohio Valley-based source yet, adding that while there’s been a lot of talk about prices trending down $20-$30 on cuts and shred, and down $50/gt on primes, he thinks prices in his region could soften further than that.
“If you take a look at the mills that are over this way, Timken just had that explosion, JSW isn’t expected to buy a lot of scrap, and Cleveland Cliffs has their own thing going on, and with all of that I think the market could be down by an additional $10/gt if not more in this region.”
Sources in Texas, however, are painting a different story, and have said that resistance to downward pricing on shredded scrap could help hold shred numbers in that region at down $10/gt.
“There’s just not a lot [of shredder feed] coming in. Sellers seem to be a lot more resistant on selling shred for down more than that, but whether they’re able to hold that line and keep [prices] from going down more than that, is the bigger question,” the source said.
(Some speculate that the people who sell shredder feed to scrap dealers might hold onto it until September, when prices could be more favorable.)
Looking to Chicago, two sources in that region said that while they don’t believe that trading will start until tomorrow, they’re hearing at least one mill talk about down $30/gt on cuts, down $30/gt+ on HMS, and down $50/gt on primes.
“What’s interesting to me is that this same mill, a week ago, was talking about sideways pricing on cuts and shred, so who knows,” the source noted.
(Numerous sources also suspect that mills are testing lower prices as a means of trying to improve their profit margins. On Friday of last week, SteelOrbis reported that US HRC prices have declined by close to 43% in the past 3 months.)
Other say there’s still a quite a bit of talk about the massive ex-Brazilian cargo of BPI that was purchased by Nucor last month (for September shipment, at $490/mt CFR into the port of New Orleans), and the downward pressure this is placing on prime-grade scrap.
“As I’m hearing it they’re trying to get [other mills and sellers] to buy into down $60-$75/gt on primes, so at this point, I think that down $50/gt is in the bag,” he said. “I think we could see a situation this month where we see shred and busheling trade within $5/gt of each other. If primes come down $50-$60, and shred comes down $20/gt, you’re already there.”
A final source said that if that’s the case, there could be quite a few scrap yards with shredders that decide toss their fragmented scrap into the shredder.
“If this is the case, you could see yards decided to shred their busheling, that’s a scenario that could happen too,” he said.
Scrap is expected to start trading tomorrow. Should that happen, settled prices could emerge by end-of-business on Friday.