US Midwest scrap prices take a beating in September

US domestic scrap prices trended downward overall during early September buys, but prices in the Midwest took the hardest hit. In the beginning of August, the general expectation was that the month's strong uptrend would continue into September and scrap prices would increase again this month, although not as drastically. As a result of the initial uptrend expectation, many mills bought heavily in August to avoid having to pay too much of a premium in September. But as August was coming to a close, it became evident that some mills bought so heavily in August that they would need to buy very little scrap in September. So when a couple major Midwest mills went out to buy scrap following the Labor Day holiday, they initially quoted a decrease of $20/lt from August levels. Other mills pushed for further decreases on account of soft finished steel prices (particularly for flat rolled products) and tepid steel demand across the board. By the time the market settled, domestic Midwest HMS I prices only fell about $15-$20/lt but both shredded and busheling prices fell an average of $25-$30/lt.

US East Coast scrap prices were also anticipated to increase in September, even more so than prices in the Midwest given that August scrap price increases in areas such as Pittsburgh and the upper East Coast rose modestly compared to Detroit and Chicago. East Coast scrap dealers that sold early this month were able to sell at sideways prices compared to August, but prices also began to fall as more mills entered the market. Still, scrap prices in the East Coast fell an average of about $15/lt in September, largely because the August increase was far less significant. While soft finished steel prices and demand certainly impacted the price decline, a weak export market also played a major role. Although Turkish mills have intensified their ex-US scrap bookings in the past week, scrap prices to Turkey have declined as compared to previous price levels.