Scrap market sources throughout the US say that despite seemingly leveled export scrap cargo prices into Turkey, they believe that domestic prices are likely to soften again in June. The extent of next month’s drops, however, are expected to be largely regional, with some areas, such as Chicago, anticipated to have steeper dips in prime scrap compared to other parts of the country.
“I do expect the market to be down at least $40/gt in June,” a Chicago-based source said. “It doesn’t appear the mills are having any trouble getting scrap.”
Others have pointed out that sheet steel pricing, including spot market prices for HRC, are still in a downtrend that’s expected to last through Q4. For example, although today’s most commonly heard HRC transaction price range is trending at $52-$55 cwt. ($1,146-$1,213/mt or $1,040-$1,100/nt), FOB mill, quiet offers up to $10 cwt, ($110/mt or $100/nt) are rumored to be available to large-tonnage buyers.
And while some have said they feel that flat rolled pricing is irrelevant, others believe that if flats pricing continues to soften, that mills will try to take scrap prices down as well, adding that “the mills are going to need to get their pound of flesh from somewhere.”
“I believe the USA market has room to fall [in June] ," a source in the South added. “I thought it would have been worse in May.”
Sources in Southeast largely agree.
“I think the Midwest [will be] forced to correct and [will] see the steepest drops,” another source noted, adding that demand for June is still solid and that mills will still need to buy. “[Despite strong demand,] I’m thinking down $20/gt in June for the South and down $40/gt+ across the Midwest.
A final source said he thinks that down $30/gt in June could be likely based on current scrap inflows, adding that if scrap drops too much in June, a rebound could take place as soon as August.
“If it only drops $30/gt we could see a quiet 2nd and 3rd quarter for scrap pricing,” he concluded.
Additional information is expected to emerge before the end of next week.