During the final weeks of May, SteelOrbis sources throughout the US were mixed on their sentiment for June scrap prices. Although some pegged the market at strong sideways, a handful of others expressed concerns that prices would soften. In our last report, the bulk of SteelOrbis sources felt more confident in predicting that, for the most part, the market was likelly to settle at up $10/gt ($10/mt).
And while scrap trade remains slow—though it’s only the second day of the month—early indicators suggest that prices in the Midwest and East coast will, in fact, settle at sideways to up $10/gt ($10/mt), depending on the mill and the grade.
“The mills are only functioning at half capacity, and I think the numbers as of yesterday put the capacity utilization rate at about 54%,” a source said. “On the East coast, two of the mills have said they’ll have depressed melt schedules, and they’ll likely be offline for two weeks in June, if not more. Demand is starting to get a little bit better on the longs side because construction projects are resuming, but on the other hand, we’re entering the summer, which has always been a slow time for the steel industry.”
Another source said that while mills in the Detroit area are “slightly more optimistic” based on the fact that automotive [production] lines have restarted, they’re exercising caution.
“Yes, automotive is starting to come back, but no one expects that they’re going to turn on the lights and ramp production levels back to pre-COVID levels,” he added. “One of the guys at one of the mills has said he already has more shredded than he wanted to buy, so I think we’ll see a lot of sideways pricing in that region.”
A source in Chicago said in his region, he’s seeing the market trading at sideways for obsolete scrap, with the possibility of up $10/gt on prime.
“The market so far seems to be a bit of a mixed bag because no one is in a huge hurry to buy,” another source noted. “Flow is better and it seems like prices for some finished steel products are creeping up, and prices are also slowly creeping up for export. But as a whole, the scrap market seems to be in ‘wait-and-see’ mode.”
A final source offered a slightly more positive view, adding a belief that "in some instances, I think we could see a few up $20/gt ($20/mt) transactions on prime, in some deals, and we may see a handful of up $5-$10/gt ($5-10/mt) on some cut grades, depending on the mill and the region."
June settled scrap prices are expected by the end of the week.