Per a preliminary survey conducted by SteelOrbis, sources inform SteelOrbis that “the market will continue to trade by region, and the domino effect will determine the final outcome.” A separate source said, “Trade tensions and weather are probably the two most important factors in play.”
East coast exporters are bracing for further price point declines in upcoming Turkish scrap export deals. Exporters on the East coast have reportedly decreased dock prices by $15-20/gt within the week after having decreased approximately the same amount early in December. The lower prices are expected to also reflect in reduced scrap flows into yards.
Turkish mills are expected to place downward pressure on price and limit volumes for shipments in late December and early January given the weak environment in both their domestic and export finished steel markets.
On the East coast, scrap sources report the strong dependence and effect from exports. If Turkish mills aggressively reduce prices and limit vessel purchases, a source noted the potential for an additional downward scrap price adjustment of $5-20/gt in January. Depending on scrap inventories on the East coast, especially shredded, those volumes may be offered inland which would place downward pressure on prices in Pennsylvania and Ohio.
Several sources report an expected stability in the Midwest that should result in sideways to strong sideways price movements in the January scrap buy cycle. Due to weather considerations and demand levels, several sources believed shredded scrap could experience strong sideways movements in January. A source noted an expectation of larger buys in January compared to the restrained buys in December. He stated that mills could be “ramping up” production as the year begins since mills in December had to “show discipline due to end of year financial reporting and exposure.”
Assessing the remainder of the first quarter for the Midwest, several sources report expectations of a soft sideways movement in February and a possible correction of $10-30/gt in March depending on grade. Sources report that unknown weather and political conditions add to the uncertainty of Q1 2019. A harsh and longer winter would support scrap prices.