Scrap market sources in the Northeast, Midwest, and the Southeast have said that while December prices have not settled yet, they believe that up $20-$30/gt will be where the market lands.
Sources have also indicated that scrap inventories in sellers’ yards are “extremely low,” which is directly linked to the months-long downtrend in mills’ paying prices.
“I drove past 8-9 scrap yards in the past few days and everyone is empty,” said a source in the Midwest. “They had maybe 4,000 tons of scrap between them.”
Another source said he’s seen a similar situation in his region.
“Scrap supplies in the Ohio Valley and Midwest are tight. Busheling is tight, P&S is tight; the mills are coming up short and the [scrap] dealers are down to the ground on scrap no matter what grade it is,” he said, adding that the dealers that do have scrap aren’t especially motivated to sell because they believe that January prices will be higher.
Demand for scrap is also higher than initially anticipated. Not only are mills’ trying to buy more scrap, several are having difficulties procuring their “normal amount.”
“This is the case across the country,” a third source noted. “Mills’ inventories are low and they’re looking [toward the spring months] already and they don’t have scrap to melt. I don’t see a runaway bus [when it comes to prices] but it will probably take prices going up $50-$60/gt to get any volume back into the pipeline.”
Multiple others have said they’re “not at all surprised” with the current state of the market.
“We’ve all said this was going to happen and here we are,” a source in the Southeast added. “We’ve been saying this for months.”
For example, in mid-September, a Chicago-based source told SteelOrbis that he believed that if scrap prices were limp in Q4, that scrap supplies would be weak by Q1.
“If the mills think that up $20-$30/gt is going to turn the flow back on they’re nuts,” a final source said. “What did they think was going to happen after months of declining prices? Did they think they could snap their fingers, raise prices $20-$30/gt and get scrap flowing again? Do they think they’re Samantha from Bewitched [a 1960s US television show whose main star was a witch with supernatural powers], and that they could twitch their nose a couple of times and scrap would magically appear?”
Settled scrap prices are not expected to emerge until tomorrow, however, many suspect that prices will land at up $20 for HMS and P&S, up $20-$30/gt for shredded, and up $30/gt for busheling scrap. Sources have also said they’re aware of quiet deals that are taking place above these ranges.