Sentiment within the US domestic scrap market has taken a turn for the better, sources note, adding that it’s now widely expected that scrap prices in the Midwest / Ohio Valley region are poised to rise.
“A week ago, a lot of us were blowing off the idea that scrap would come up again in July, but it seems that the wind has changed,” a source said, adding that based on what’s going on in the finished steel market, “the scrap market can definitely support an increase.”
For example, current US HRC prices are trending in the range of $85.00-$87.50 cwt. ($1,874-$1,929/mt or $1,700-$1,750/nt), FOB mill, against a range of $80-$81 cwt. ($1,764-$1,786/mt or $1,600-$1,620/nt), FOB mill, during the first week of June.
Another source agreed. “More and more people are starting to think that up $20-$30/gt is possible. I also think the mills won’t mind paying it because they can use ‘higher scrap prices’ to help bolster the cost of their finished steel.”
Other sources note that some mill inventories appear to be on the lower side, adding that while “no one is out, no one is holding any significant amount of inventory either.”
The reasoning behind the uptick is leaving some sellers perplexed, as scrap inflows into the yards is still “pretty good.” In fact, one source on the East coast noted they dropped their peddler prices at their shredder, and their flow is still significant.
Dock prices on the East coast are also down, week-over-week, and the most recently heard ex-US scrap cargo to Turkey is down slightly, from $501/mt CFR for HMS I/II 80:20, to $499/mt CFR.
“I don’t think that higher prices will get any more scrap into the yards, and I don’t think higher prices are going to solve any of the trucking, transportation and logistics problems that we’re all having,” an Ohio Valley-based source said. “We’ll take it, but I don’t think higher prices are going to solve the transportation issue, which seems to be the biggest thorn in the side of the market right now.”
Next month's scrap prices are expected to settle after the July 4 holiday weekend.