Although scrap market players’ predictions for September are largely varied, the prevailing suspicion is that prices will hold at sideways. The rationale behind this thinking is linked to several factors, such as still stable (yet relatively unexciting) scrap cargo sales prices into Turkey, slowed scrap inflows into domestic scrap yards (due to seasonal factors and soft peddler prices), and the fact that mills aren’t expected to make large volume buys during next month’s cycle.
“On one hand, [scrap] inflows have slowed down based on what happened with pricing this month,” a source said, noting that in most places, cuts and shred were down $20-$30/gt, and busheling fell by an astonishing $70/gt. “On the other hand, there’s some [production] outages that are coming up and I don’t think the mills are going to be buying a ton of scrap. I think it’s going to be a wash.”
Another source said that he too is guessing that September will be sideways.
“It really seems like we’re bouncing along the bottom,” a third source said, adding that while he thinks that prices could come up modestly next month, that order books need to strengthen and the steel market needs to get a bit of tension in it before scrap prices can start to firm.
Others feel that prices could come up or trend down.
For example, a fourth source said he believes that the market will trend at strong sideways (and that primes could firm by as much as $30/gt next month) whereas a fifth source said he thinks that primes will hold sideways, and that cuts and shred could come down by $20/gt.
“I don’t think there is any question that consumers will raise [busheling] prices to stop it from [being thrown into the shredder, since shredded prices are currently at or slightly above prime grade scrap prices],” the fourth source said. “So I think bush will need to move up $30/gt for September, and if not they will be scrambling [for prime grade scrap] by October. Shred should be sideways as volumes have slowed down at the yards. My my guess is a strong sideways.”
The fifth source said that while he agrees that the price spread between shredded and busheling scrap needs to re-normalize, he suspects that will happen by shredded prices coming down.
“I think we all agree that primes will trade higher than [secondary grades] over the next 1-2 months,” he said. “But will it be done with primes increasing [and secondaries staying sideways] or secondaries decreasing? I don’t see much justification for primes to increase [in September.] I’m thinking down $20/gt on [secondary grades.] I think the only way this normalizes is with obsolete grades falling.”
Additional clarity is expected by the end of next week.