US domestic scrap prices settled down across the board during this month’s buy cycle, with busheling scrap settling down by as much as $50/gt in various regions. Some sellers, however, think bushing prices could face additional pressure in October.
“I think the overall market looks steady, but there’s still a lot of busheling scrap out there,” an Ohio Valley-based source said. “I wouldn’t be surprised if we see further reductions in the spread between prime and secondary scrap grades next month.”
Others, however, while in agreement that prices for cuts and shredded scrap are likely to trade at sideways, or perhaps soft sideways during next month’s buy cycle, feel that busheling prices should also stay stable. This is largely linked to a recent announcement by General Motors, in which the automaker said they needed to temporarily halt production at nearly all of its North American plants due to the global semiconductor chip shortage.
“Is there a lot of busheling scrap around because guys weren’t interested in selling it at down $40-$50/gt this month,” one source asked. “You also need to factor in the production delays at General Motors, and the fact that the production delays are going to tighten supply [of busheling scrap].”
Another source agreed.
“There was some major pushback at the down $50/gt on busheling, even though it stuck,” he said. “I refuse to believe that any dealer would accept down pricing on bush.”
Also, of note, is that a small minority of those polled believe that pricing for cuts and shred could trade up slightly in October, citing improved prices for containerized scrap off the East coast. Other sources, however, question the validity of that prediction.
“There are lots of reasons that container prices are up that have nothing to do with demand, such as a scarcity of containers and shipping rates,” a source said. “I have a hard time believing that any containerized scrap that’s being shipped by the exporters is going to drive prices up.”
An East coast source said he also believes the market “doesn’t have a lot of fire power moving forward,” especially due to lagging export cargo prices to Turkish steel makers. “Prices to Turkey are down and I don’t see them improving any time soon. In terms of how this could impact the domestic market, I don’t think the mills want to jeopardize their inventory positions in Q4, so while I think prices for cuts and shred could be down by a little bit next month, I don’t think they’ll try to take the market down by a lot.”
A final source noted that trying to predict October’s price trend, less than a week after September prices settled, would be difficult, at best. “It’s way too soon to call what’s going to happen next month,” he said. “A lot can happen between now and October 1.”