The start of the November buy cycle is less than two weeks away, and today, scrap market players from throughout the US believe that an uptrend is on the horizon.
The latest wave of optimism, sources note, is linked to news out of Turkey. Earlier today, SteelOrbis reported that a Turkish steelmaker purchased an ex-Poland cargo of HMS I/II 80:20 scrap at $502/mt CFR. Today’s purchase reflects an approximate $12/mt jump from last week, when SteelOrbis confirmed an ex-US cargo was sold to a producer in the Maramara region at $489.5/mt CFR.
“The docks haven’t raised their prices yet, but I’ll be surprised if it doesn’t happen soon,” a source said. “Once that happens, I think that [the docks] will drag the rest of the market up with it.”
Other factors weighing favorably on scrap prices include the start of the winter, the nearing year-end holiday season, the start of hunting season, and the fact that some mills made smaller buys in October.
“There are a lot of signs that are pointing to up,” another source said. “Last week I was in the up $20/gt camp, but this month, I think you could see the market up between $20-$50/gt depending on the region.”
Others agree. “Finished steel prices are still at record-highs and it’s not like the mills can’t pay more for scrap,” he added. “Scrap flows are slowing due to seasonal factors and when you consider that, the recent sale to Turkey, and the fact that you have other mills that are starting to come back online after their planned maintenance outages, I think the market is in a stronger position today than it was last week.”
Another source believes that if the mills don’t take prices up, that some yards will hold off on selling. “The yards don’t have any desire to sell at sideways,” the source said. “Everyone has made a ton of money this year and yards have been in a mad rush to reinvest their profits into their business because that will reduce their taxable income. I think that if the price isn’t right next month, that some yards won’t be inclined to sell until one, the mills really need it, or two, until after the first of the year. Sure, there are some owners that don’t like to hold onto high-priced inventory, and I think they’ll sell regardless, but others will be willing to take the gamble. We think the overall prognosis for the 6 months is solid.”