Expectations for the US ferrous domestic scrap market in August are tepid despite the ongoing boom in the finished steel sector. Contacts report that there are ample amounts of scrap in the market, given that some material has not left the country due to a weak export market on both coasts. Even if some of the material for exports is not of the same quality as the material consumed by domestic mills, sources believe an improved export market could lower available supplies.
Ultimately, though, some sellers remain bearish when it comes to scrap even if the steel business in the US is booming. Cleveland Cliffs (Cliffs) recently announced it is expected to have its best financial performance in H2 than in the past five years, and there have been several other positive, even extraordinary, financial performances reported by other steelmakers such as Nucor and Steel Dynamics Inc. (SDI). At the same time, scrap prices in the US have not increased in a single month.
In Cliffs' case, it should be noted that they are still reporting a net loss for both Q2 and H1, for the amounts of $145 million for the former and $382 million for the latter. At the same time, both net losses are significantly smaller than what they were one year ago. In Cliffs' case, the company has stated that import tariffs have shored up financial performance, which could mean that they would remain in place even after US President Donald Trump leaves office.
For its part, SDI announced in Q2 an increase of 8.8 percent in total steel shipments in H1, reaching 7.4 million nt from 6.8 million nt in H1 2025. In Q2, the company shipped 3.7 million nt of steel, up by 12 percent annually from 3.3 million nt. Mark Millet, Chief Executive Officer (CEO), mentioned that their customer's steel inventory levels remain at an historical low, which has helped steel pricing. He also mentioned supply chains are increasingly regionalizing in the US.
But scrap still struggles
Still, for scrap in July, it was mostly a sideways month, with even some decreases in specific grades. Prime grades were unchanged everywhere, with #1 busheling staying flat in Chicago at $450/gt delivered consumer, at $465/gt delivered in Pittsburgh, $410/gt delivered in Houston, and $405/gt delivered in St. Louis. HMS I decreased by $10/gt in the South and Southeast and some marquee markets in the Midwest such as Chicago and Detroit (it did remain sideways in Pittsburgh, Cleveland, and Cincinnati), at the same time that shredded also fell by $10/gt in select markets.
The export market has been turning the corner this week as the price of US-origin HMS I/II 80:20 rose by $3/mt this week to $375/mt CFR Turkey, and even some deals on Thursday from USEC showed an even higher price of $376/mt CFR. Yet some of the participants in the Midwest believe it will not help domestic prices as much, given the differences in the qualities of the material consumed domestically and the material shipped for export. HMS I is particularly distinct in those two modalities, whereas shredded can be moved inland from the coasts more easily.
For their part, exporters on the USEC report that there is still a lot of material available, and even though inflows slowed down with the latest price drops in the past four weeks, they still believe they can instill a few more drops in the prices to docks, even with export prices reaching an inflection point.
Ultimately, participants in the scrap sector believe exporters and domestic mills will keep protecting their margins aggressively. Or improving them as mandated under the shareholder system of a public company. Some have noted that some scrap buyers owned by the steelmakers will come out every month trying to push prices down regardless of the market environment or whether they believe they could be successful or not.
Higher ocean freight rates given the renewed uncertainty in the US-Israel-Iran war are becoming a reality, though. In USEC, the cost of bulk freight rose to $50/mt CFR Turkey from $44-46/mt CFR a week prior.
On the US West Coast (USWC), a similar situation where exporters are expecting higher ocean freight rates is causing them to protect their margins and seek higher export prices. The price of containerized HMS I/II 80:20, which had been falling for eight straight weeks, was unchanged this week at $305/mt FAS Long Beach port. Yet, are at the same time cautious of not lowering prices to docks amid the uncertain environment. Some exporters announced a $10-20/gt price reduction in collections to docks a couple of weeks ago but have not followed through yet in their implementation.
