US scrap prices expected to firm in December

Wednesday, 20 November 2019 22:01:35 (GMT+3)   |   San Diego
       

Last week, SteelOrbis reported that market players throughout the US believed that domestic scrap prices would show some strength in December. And while last week’s belief was that the market would likely settle up $10-$20/gt ($10-$20/mt) next month, sentiment continues to improve.

A growing number of SteelOrbis sources are now saying they believe that the market could trend up by as much as $20-$30/gt ($20-$30/mt) in December.

“I’m in agreement with up $20-$30 for next month,” an Ohio Valley source said. “Supply is not good in Ohio valley or Cleveland. Industrial productions are still very slow, and I can’t imagine cut grades and shred are doing any better especially with all the snow and how cold it’s been. I think next 90-120 days are going to be good for suppliers.”

A second Ohio valley source concurred. “I too think that we will see a bump. A couple factors seem in play,” he said. “The supply-demand balance has tightened, and demand is picking up some. That said we’ve seen some yard price bumps already and my sense is that those will bear fruit. People sometimes think a modest bump won’t add tons to the market, but I am not in that camp. Buying will be a little tricky with the late Thanksgiving. My sense is that we see [a lot of to-be-determined] lining up next week. I think that buying starts 12/2 late afternoon and wraps up Wednesday into Thursday morning.”

East coast sentiment, however, is mixed. “December is bullish and up $20/gt ($20/mt) is expected,” a source said. “Due to the short month of November and December (holidays), buying/settlements should be swift in order for the mills to get delivery of the tonnage purchased.  Supply has definitely been tight with the low prices paid at the scale and the number of export cargoes sold that need to be filled. Bulk Export to Turkey has hit a lull, but expect it to pick up in the near term since the mills are basically hand to mouth on their scrap purchases / finished steel sales.”

Other East coast sources were optimistic, but not as bullish. “If [the mills] need it, they’re going to come into the market for it,” he said. “The old purchasing guys would get worried and buy [at higher prices] because they didn’t have a lot of inventory. Now, for the most part, all of this is being dictated by the upper echelon. Mills’ buying guys are only taking orders. By and large they go along with whatever the people upstairs tell them.  As far as where things will land in December, you could get some bad weather and that will have an impact, and maybe the market goes up $50-$60/gt… because it only takes one domino to fall. But at this point, I think the market settling up $20-$30/gt is wishful thinking.”


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