The US domestic ferrous scrap market could trend sideways in May, according to contacts, as market fundamentals support a sideways trend. In previous days, there were rumors of a possible $10-20/gt decrease in May from April-settled prices, but demand for finished steel seems too strong to let scrap soften further.
Some participants are even hopeful that 2026 will buck the downward trend of 2024 and 2025. In 2024, scrap prices fell in March and did not recover for the rest of the year, while in 2025 they fell in March and recovered only in December (there were some sideways months in those periods). Yet this year, some fundamentals look better, even if only slightly so. According to the American Iron and Steel Institute, the installed capacity utilization rate for the week of Apr 6 is at 79.8pc, close to the historically good level of 80pc (not seen since August 2024). In the same week of 2025, it stood at 75.2pc and in 2024 at 78.6pc.
Finished steel prices continue to rise, with this week another $10/nt ($11/mt) increment was seen for hot-rolled coil (HRC), reaching $1,050/nt ($1,157/mt) FOB mill from $1,040/nt ($1,146/mt) FOB last week, while contacts mention that plate has seen increments in the $90-120/nt ($99-132/mt) range.
Some venture to say that scrap is currently undervalued, and that #1 busheling should be $60-75/gt ($66-83/mt) above the current level. In Chicago and Detroit, the grade settled sideways in April at $450-455/gt ($496-502/mt) delivered consumer. While cut grades, in their opinion, should be $60/gt ($66/mt). HMS I decreased by $20/gt ($20.3/mt) in April to $370-375/gt ($408-413/mt) delivered in those same markets during the same period. They point to the relationship between finished steel prices and scrap prices, where the spread for #1 busheling and HRC sits close to the $650/mt range, whereas traditionally, they note, it was close to $400/mt.
Mills did separate the prices for #1 busheling and shredded, with the latter settling in the Midwest at $430/gt ($437/mt), thus upholding the historical $20/gt ($20.3/mt) difference between the two grades.
Scheduled maintenance shutdowns are not expected to cause significant downward pressure in May, as there will be fewer days of downtime, spread across separate regions. The Spring weather keeps improving, though, and mills are mentioning they are seeing scrap flows loosen up even more.
Exports
The export market on both coasts seems to be picking up the pace recently. Deals seen on Friday point to higher levels for HMS I/II 80:20 on the US West Coast (USWC), with deals to Bangladesh reported in the $410-414/mt range. Containerized scrap is already reported to be growing in price, with HMS I/II 80:20 on the USWC rising to $340/mt FAS LA port from $325-335/mt FAS earlier this week.
On the US East Coast (USEC), deals seen on Friday for Turkey were at $400-403/mt CFR Turkey, with the latest deals pointing to the higher end, representing a $3/mt increase from previous levels. Activity to Turkey picked up this week, as was previously projected due to the country needing several cargoes for May. Some Turkish mills are reportedly already purchasing cargoes for June.
It remains to be seen whether these increases will be passed on to USEC sellers at the docks or whether exporters will continue to try to protect their margins. The price of HMS I in Philadelphia to the docks settled this week at $280-290/gt ($284-295/mt) delivered export yard, while in April, the price for the domestic market in that region decreased by $20/gt ($20.3/mt) to $345-350/gt ($351-356/mt) delivered consumer. Given the disparity between dock and domestic prices, contacts in USEC are wary that dock prices cannot go lower if exporters wish to secure volumes.
