Domestic scrap prices may have settled down in all regions during this month’s buy cycle, but sources close to SteelOrbis have said that the trend for July is still anyone’s guess.
One source said he thinks it’s interesting that mills took June scrap prices down by anywhere from $20-$60/gt depending on the grade and the region, but within days, flats mills’ announced their latest round of increases.
In the latter part of last week, US Steel, Nucor, and ArcelorMittal all announced they were raising HRC prices effective with all new orders. Nucor established new minimum base pricing at $45 cwt. ($992/mt or $900/nt), whereas AM/NP Calvert announced their new minimum HRC base price was set at $47.50 cwt. ($1,047/nt or $950/nt). US Steel, on the other hand, did not establish a new base minimum for hot rolled coil.
“Mills were really quick to knock [scrap prices] down and then raise [HRC] prices by $2.50 cwt. ($55/mt or $50/nt),” a source said.
Another source agreed.
“They basically padded in an extra $5.00 cwt. ($110/mt or $100/nt) of margin on their steel sales,” he added. “At this point I can’t imagine anyone is going to be willing to sell at down prices in July. It doesn’t pass the smell test.”
On the other hand, sources within the flat rolled steel segment have been quick to say they feel as if last week’s price increase announcements “aren’t worth the paper they were printed on.”
“This isn’t the first time that mills would roll out a price increase in a down trending market in hopes of stopping the bleeding,” a flats source said. “Will this shake a few people off the sidelines and lead to a small uptick in order activity? Probably. Does anyone think this has actual legs and will set a floor on [HRC] prices and ultimately, keep things from softening more? No.”
Some scrap market sources say they feel that June scrap prices are the bottom. Others are less certain.
“This market has bottomed,” one source said, whereas a second source said he “got hammered by the mills this month,” adding that “the mills are buying [scrap] below published pricing and pretty much inferring take it or leave it.”
A few sources said that if finished steel prices continue to soften, they expect the market could drop again next month.
“I think flows are still pretty decent,” another source added. “I’d put July at down $20 with primes leading the way with other grades being sideways.”
“[If the finished steel market is still softening] it feels like we could be in for another decline, but at this point, it’s anyone’s guess on what exactly that decline looks like,” commented a source in the Southeast.
A final source said that while he thinks it’s still a bit difficult to peg what may happen during July’s buy cycle, he doesn’t see a lot of softness.
“I am hoping the scrap prices have bottomed out. It appears export has bottomed out and that dealers are in a wait and see mode, and a lot of uncertainty still exists,” he said. “I believe demand in July will remain about the same as it was in June. I don't think any dealer is willing to hold scrap in anticipation of a rising market.”