February scrap is now expected to settle $20-30/gt ($20-30/mt) higher versus January levels as recent cold weather and storms is likely to continue to complicate the delivery of new scrap to many local collection facilities, scrap insiders told SteelOrbis this week.
With supply at many Midwest and Southeast collection facilities reported low, few think there’s much possibility for February scrap prices to decline, following higher January values. Supply on the ground at mills also is reported low as well, scrap insiders said.
“I would say there’s very little possibility for any downside risk,” said one Midwest scrap insider. “I know that mills are hungry for scrap this month, as many have let their supplies dwindle down because of the recent cold snap.”
In the Midwest, problems with overland transportation of scrap were not limited to weather-related delays to truck deliveries, as barge transportation of scrap and other products on the Illinois River is reported to be shut down through March as the US Army Corps of Engineers completes work on docks. River closures and restricted movements are reported for barge movements in Ohio, Tennessee and Kentucky, according to reports from American Commercial Barge Line.
With the beginning of the February buy cycle quickly approaching, some contacts think even higher prices are possible, especially for prime grades as well as P&S scrap.
“February scrap prices are up on cold wintry weather and reduced in-flows into collection yards,” reported another Midwest scrap dealer. “It sounds as if prices will be up at least $20/gt. I’d be surprised to see $50/gt premiums as some have said, but I have heard that rumor too.”
Based on a $20-30/gt increase for February scrap Ohio Valley HMS 1 could settle at $365-385/gt ($371-391/mt) delivered to customer, while shredded scrap could settle at $420-425/gt ($427-432/mt) on a delivered basis. P&S is likely to settle at $410-$420/gt ($417-427/mt) delivered to customer, while prime busheling scrap could settle at $435-460/gt ($442-467/mt) delivered to customer.
Predictions for the US East Coast remain problematic for February, therefore it will continue to be assessed sideways for now to January pricing, pending additional data. Insiders said, depending on demand at East Coast export yards, price hikes in the region also are likely as more supply gets diverted to higher priced Midwest markets. East Coast February HMS is last reported near $335-350/gt ($340-356/mt) delivered to customer, while shredded is likely near to $365-375/gt ($371-381/mt) delivered. P&S is seen at $335-345/gt ($340-351/mt) on a delivered basis based on a sideways expectation, while prime busheling scrap is likely to settle at $390-410/gt ($396-417/mt) on a delivered to customer basis.
According to the US National Weather Service, temperatures over the next 8-14 days are seen more moderate with normal to above normal temperatures forecast across much of the South and Southeastern US, while near normal to below normal temperatures are forecast for the Midwest and Upper Midwest. Precipitation in the Midwest and Upper Midwest is seen above normal across much of the region, while the South and Southeastern US are projected to see near normal to below normal precipitation.