In the early days of August, many sources close to SteelOrbis believed that scrap prices would likely rebound, citing strong finished steel prices and still-strong market demand. Sentiment, however, has since started to change.
“I don’t think scrap prices are going back up and I think it would take a lot of prayers for the market to stay sideways,” a source said. “The guys I’ve talked to are getting ready for prices to go down.”
Inflow into scrap yards is still pretty good, sources note, adding that lagging activity from the US East coast export market is also a factor. “I think the overall sentiment is that it’s almost just ‘shrug and give in,’ because what are we going to do? There’s plenty of scrap flow, although busheling is still tight, so I wouldn’t be surprised if bush stayed sideways.”
Others, however, disagree on where busheling scrap prices might land.
“I talked to a guy this morning who thinks that busheling could come down by as much as $30/gt,” another source added. “I get the sense that, with [busheling] prices where they are, that mills have been backing away from their busheling programs and looking at alternatives.”
Another source said that while busheling scrap is “tight in some pockets, some have more of it than others. There’s definitely some bushing to go around in some areas, but I’m also in more of the sideways camp,” he said. “But overall, I see downward pressure on the market, regardless as to what’s happening with sheet steel prices. When people ask why scrap is going down while sheet is going up, with scrap, there’s plenty of supply, demand is great, but supply is greater. Supply and demand for sheet steel is an entirely different story.”
A final source said that while they also believe that US domestic scrap prices are likely to trend down, that they believe that busheling scrap prices are unlikely to remain stable. “We’re hearing that the mills will try to push for down $20/gt because the current spread between busheling scrap and the other grades is so high, but I guess we’ll all find out how this shakes out come September.”