As the end of August approached, sources informed SteelOrbis that scrap prices were expected to trend down by $20/gt ($20/mt) at the most. As scrap export prices to Turkey declined, most scrap sellers surveyed by SteelOrbis were resigning themselves to the full price erosion of the previous month’s gain.
As scrap trading started after the holiday this week, mills began to issue surprisingly low bids on prime grades of $30-40/gt ($30-39/mt) lower than the previous month’s settled prices. Depending on region, shredded scrap bids decreased $25-30/gt ($25-30/mt) compared to the previous months settled prices. Sources attribute the deeper cuts compared to expectations to lower global scrap prices, lower scrap import prices by Turkish mills, lower export volume sales from the US to emerging markets, and sufficient supply of scrap in the domestic market despite lower prices at the scales and docks.
A Midwest source added, “The deep cuts were not expected as aggressively in the September scrap buy cycle. If one can see a positive in all this is that achieving the supply and demand equilibrium faster will minimize market uncertainty and allow for scrap prices to remain stable or gain in Q4 2019.” Another source stated that the deep cuts in scrap deals in September will result in additional feedstock pricing cuts that could put pressure on supply during the winter season, thereby supporting scrap prices.