Scrap markets sources throughout the US say they’re bracing for an August downtrend, adding that weak export activity, falling dock prices, falling sheet steel prices, and lessened demand from domestic mills (due to planned maintenance outages), are all placing downward pressure on the market.
The current expectation is that cuts and shred will come down by $20-$30/gt, and that primes will soften by $50/gt.
“In the Northeast, flow is still good, but there’s not going to be a ton of demand this month. Steelton is shut down for two weeks for maintenance, Coatesville isn’t really buying from the open market because they’re getting all they need on their long-term contracts, and they get everything else from Cliffs or Ferrous Processing,” a source said. “Gerdau is overflowing with scrap, and the exporters keep knocking prices down.”
An explosion that took place at the TimkenSteel Faircest plant in Ohio earlier this week is also expected to impact August scrap demand.
“Everything I’m seeing points to down,” another source said. “I think down $20-$30 on cuts and shred would be blessing, and wherever prime goes, prime goes, I think people will sell those numbers if they can get the orders. But there may be some sellers that are forced to hold scrap for no other reason than the mills aren’t taking it.”
Another source agreed with down $50/gt for primes. “Primes will continue to correct downward to get more in line with the typical spreads to shredded,” the source added. “That could mean a correction of $30-50 or so in August for primes.”
Others note that much-softer pig iron prices, which have corrected substantially within the past month, are also placing downward pressure on prime grade scrap.
“I know that some people are still talking about the possibility of sideways to even up $10/gt for next month, but I’m just not seeing it,” a final source said. “I just don’t see how market fundamentals would support that.”
The August buy cycle is expected to start early next week.