Sentiment within the US domestic scrap market is largely unchanged in the past week; strong demand for finished steel, coupled with new upticks in Turkish import scrap prices, are expected to bolster domestic scrap pricing in May.
Earlier in the week, however, some SteelOrbis sources expressed concern that Turkey’s import scrap cargo prices had stalled. For example, the last US cargo for HMS I/II 80:20 sold to Turkey was transacted at $432/mt CFR, but, after that cargo was sold, East coast exporters raised their price expectations to $440/mt CFR.
“If export doesn’t start to beef up, the domestic mills may try to leverage that in May,” a source said on Wednesday. “I don’t think the mills would try to push prices down, but I think the mills will be less inclined to pay more.”
Yet today, with the news that Turkish steel makers booked cargoes of HMS I/II 80:20 at $435-$440/mt CFR, sentiment regarding the domestic market has improved. Sources in Istanbul say they believe that prices could increase further, which could renew export activity off the East coast.
And while many scrap market sources say they believe that prices are likely to trend at sideways to up $20/gt during next month’s buy cycle, the potential for up $30/gt has waned.
“I think we could see up $10/gt on cut grades and up $20/gt on shredded scrap,” a Midwest-based source said. “All of the yards see that the mills are making record profits. The economy is going strong and if the mills try to come in at sideways, I think they’ll get a lot of pushback.”
For example, earlier today, the Commerce Department announced that US economic growth had accelerated in the first 3 months of the year, adding that the Q1 gross domestic product grew to 6.4%, against 4.3% in Q4 of last year. It’s also worth noting that the US domestic steel makers are still touting their record-breaking Q1 profits.
Raw steel production has also continued to rise. On Monday, AISI reported that for the week ending April 24, 2021, domestic raw steel production was 1,781,000 net tons while the capability utilization rate was 78.4 percent. Production for the week ending April 24, 2021 is up 0.6 percent from the previous week ending April 17, 2021 when production was 1,770,000 net tons and the rate of capability utilization was 78.0 percent.
Also, notable, is that Western Pennsylvania sources have said that scrap flows in that region have been “OK,” adding that there are some pockets throughout the country where inflow is good, whereas in others, it’s lagging.
“My contention all along is that May scrap prices will bounce back to March levels,” a final source added. “I believe we’ll see cuts and shred at up $20/gt because the market shouldn’t have dropped in April.”