Before January scrap prices settled, sources throughout the US believed that mills might try to take prices down again in February-- a suspicion that was largely spurred by falling sheet steel prices. “What I’m hearing is that the mills want to take prices down by $100/gt between January and February,” a source said during the first week of the month. “If prices settle down by $60/gt in January, [the mills] may try to take things down $40/gt in February.”
This week, however, sentiment has largely improved, and all sources polled said they now believe the market will hold at sideways.
In the past several days, large swaths of the central, southern, and eastern United states have been hammered by snow and ice. Parts of Northern Ohio and Western Pennsylvania got roughly 15 inches of snow, whereas some places in Western New York got as much as 3 feet of snow.
“This market cannot go down and the weather is definitely a factor,” one source said. “Up until last week, the temperatures have been reasonable for scrap flow, but we’re looking at a range of 0-10 degrees Fahrenheit (-18 to -12 Celsius) going into the weekend, which isn’t going to help. The snow and the cold weather definitely slows down peddler flow, and [scrap inflows] all of this week have been literally non-existent.”
Another source said he’s also pegging the market at sideways. “The weather has been terrible, there’s been lots of snow, and people are still digging out,” he said.
Additionally, news outlets are also reporting that additional snow is expected before the end of the week, and another, possibly more impactful storm could hit the East coast and Southeast as we head into the weekend.
“I know that [finished steel prices] are falling fast and that the mills probably want to try to take scrap prices down further because they want to get their pound of flesh from somewhere,” a source added. “But I don’t see that happening next month so maybe they’ll have to look at making less money.”