June scrap prices may have settled up sharply, but sources close to SteelOrbis say they’re not quite ready to make predictions about July.
“I think the price trend for July will all be dependent on how mills’ order books are, whether there will be any downtime, and whether automotive will continue working through their usual shutdowns in July and August,” a source said.
Economists, however, are noting that steel buyers, including service centers and the automotive industry, “seem to have gone from ‘just in time’ buying to just in case buying,” the source said. “The automotive industry seems to be trying to take as much steel as they can get their hands on, especially considering they negotiated their contract pricing at the end of last year.”
Other service center sources have also confirmed that they’re also working to build inventory, which could help keep mills’ order books firm. For example, yesterday, SteelOrbis reported that one service center indicated they recently bought four months of inventory instead of two because “a short-term end [to higher finished steel prices] isn’t in sight.”
Another scrap market source, who was also reluctant to call a price direction for the July buy cycle until closer to the end of the month, said he wouldn’t be surprised if the market held sideways.
“Everyone is getting a good flow of scrap at these [price] levels,” he said. “The exporters haven’t upped their prices substantially and even in June, when prices came up $50/gt, a lot of shredders only raised their [peddler] prices by $25/gt. I don’t see a lot of reason for the market to come up higher than it is now.”