Two weeks ago, sentiment as to how March scrap prices would trend was largely mixed, as mid-month polling garnered predictions that spanned from down $10/gt ($10/mt) to up $20/gt ($20/mt).
Yet now that East coast export prices have begun to climb, SteelOrbis sources believe that higher March US domestic scrap prices are “in the bag.”
For example, on February 10, SteelOrbis reported that a Turkish mill in the Marmara region had closed an ex-US deal for HMS I/II 80:20 scrap at $264/mt CFR. Last week, however, after an Iskenderun region-based steel producer purchased 20,000 mt of HMS I/II 90:10 scrap from the US at $282.5/mt CFR, it was estimated that the price for HMS I/II 80:20 had risen to $279.5/mt CFR.
“We think that up $10/gt is a given at this point, and that up $20/gt wouldn’t surprise anyone,” an East coast source said. “One of the mills we work with has already said they have a solid program for next month, and export is starting to pull the market up in the same way [export prices] had dragged the market down. We also expect that some of the mills in the Pittsburgh / Cleveland / Youngstown area will be drawing in scrap from East coast [yards] that have railroad operations. So yes, we think prices will be up in March, because export is up and there’s not a lot of scrap available.”
An Ohio Valley source agreed, but said he wouldn’t be surprised if the market settled up a little bit higher.
“The market feels strong sideways for sure, but my gut feels that maybe this thing is stronger than up $20/gt,” he said. “I agree with what you have heard about the market firming next month, however if for some reason the mills try to push prices down, then there’s a good chance we’ll see sideways. However, I’m not seeing that yet. What I can tell you, is that prime [grades] feel the strongest of all grades right now. There is no scrap inventory in smaller dealer yards plus the rivers in the Midwest are flooding with all the rain we’ve had, and high water levels are not good for barges.”
A third source also indicated he believes that March prices are likely to rise.
“The bottom line is that it looks like the market will be up by $10-20/gt,” he said. “Some think primes may go higher, but we’ll all see where this lands next week.”