As of late last week, scrap market sources throughout the US became increasingly pessimistic regarding where July prices might land. While some speculated that cuts and shred could come down by $20-$40/gt, others thought that down $50-$60/gt was more likely.
Predictions for prime grade scrap also varied, with some thinking that prices would soften by $50/gt, and others citing a belief that down $75-$100/gt was more likely.
This week, multiple sources close to SteelOrbis have begun to cite chatter out of Chicago indicating that David Joseph will try to take HMS, P&S, and shredded scrap down by $50/gt, and busheling scrap down by $100/gt+.
“I wouldn’t be at all surprised if primes were down by more than $100/gt next month,” a source said, adding that down $125-$150/gt may be likely. “It’s going to be a bloodbath.”
Other sources agree the market is on the verge of a sharp downturn due to still-falling finished steel prices, short lead times, the fact that the spread between busheling and shredded scrap is still far above historical norms, and still-softening dock prices.
(As of earlier this month, the spread between busheling and shredded scrap spanned between $150-$200/gt, depending on the region.)
“Pig iron is down and [cargo prices into Turkey] are still way off from where they were a month ago. Everything is coming down. All of it,” a source said. “But what I do think we’re going to see, is that the market is going to correct more than it should, and after that, we’ll see some sort of bounce. Whether that happen in August, or if it happens in September, is the great unknown.”
The July scrap trade is expected to start early next week, after the July 4 holiday.