Scrap market prices are still expected to trend down during next month’s buy cycle, sources note, adding that some now believe that prices could settle down by as much as $50/gt in June. The rationale for this prediction is linked to previously discussed factors, such as still-healthy scrap inflows, a lagging availability of shipping containers to ship scrap overseas, and still-falling export prices.
Earlier today, SteelOrbis reported that several rumors regarding two ex-US deals for HMS I/II 80:20 scrap into Turkey were concluded at approximately $455-$457/mt, CFR. If true, this reflects a drop from a cargo that was transacted last week at $460/mt CFR. SteelOrbis also reported that a deal from Croatia for HMS I/II 80:20 scrap was done at $425/mt CFR, whereas deals for the same grade were closed from Romania in the range of $425-$430/mt CFR.
“I think what you’re seeing right now is some lagging activity out of the West coast export market, falling prices out of the East coast export market, coupled with the fact that scrap inflows are still coming in, despite yards taking their [peddler] prices down,” a source said. “I really don’t see any problems with prices are coming down because as long as the yards are making their margins, and they still are, it really doesn’t matter where the prices are.”
A second source said he also believes that down $30-$50/gt is in the cards.
“If you ask the yards, they’ll probably tell you they think the market will be down $30/gt. If you talk to the mills, you might hear them talk about down $70/gt. There area lot of predictions floating around the market right now and I think what will happen in June, is that the yards and the mills are going to have to split the baby.”
Where busheling scrap prices may settle, sources say, is the big question mark that’s hanging over the market. Whereas some think that busheling prices could come down by $30-$50/gt, others point out that the current $200/gt spread between shredded and busheling scrap is “still too wide,” adding they believe that bushing prices could trend down by a higher margin.
The June scrap trade is expected to start after Memorial Day weekend. Settled scrap prices are projected to be available by the close of next week.