Last week, SteelOrbis reported that a significant number of scrap market players believed that mills would try to take August prices down by $20-$30/gt, despite news of their record-breaking quarterly profit margins.
And while most sources polled seem to be “scratching their heads” at the idea that scrap prices could soften (especially in that finished steel prices are still rising), everyone believes that “the writing is already on the wall,” and that down $20-$30/gt is “baked in” to next month’s pricing.
“Our yard has already taken prices down by more than $20/gt in anticipation of where [mills’] prices will land in August,” a source said. A second source agreed, noting that several shredders that he talks to have already taken peddler prices down by $20-$30/gt.
“Export off the East coast hasn’t exactly been robust,” another source added, noting that dock prices dropped by an additional $10/gt since our last report a week ago. “It also seems like Turkey is still trying to take prices down, and if that happens, I expect that dock prices will come down even further.”
Other sources have said they’ve already started to hear that some mills are cancelling orders that have not yet been delivered, in anticipation of lower scrap prices in August.
“Mills are going to gauge [the scrap yards] for whatever they can,” an East-coast source said; an Ohio Valley-based source agreed, adding that “it’s good to be a steel mill right now.”’
Others say they believe that prices will come down because there are a lot of yards that won’t show resistance. “It’s going to be down because I don’t think [the scrap yards] are going to resist. They can sell at down $20/gt and still make money. Earlier today, a guy asked me why the mills are cutting [scrap] prices while they’re still raising prices on flat rolled. I told him that it’s because they can.”