After three straight months of steep gains, multiple sources close to SteelOrbis believe that a US domestic scrap price correction is on the horizon. “The general consensus is that prices will be down between $50-$60/gt on cuts and shred, and down $10-$20/gt on busheling,” a source said.
The anticipated downtrend is linked to several factors discussed in prior reports. Export scrap cargo prices, and thus dock delivered prices, have begun to soften. Additionally, despite that fact that shredders have dropped their prices by as much as $60/gt in some regions, scrap inflow is still robust.
And while it was previously believed that busheling scrap could hold steady, since “there isn’t any more busheling available than there was last month,” today, most sources suspect that prices could come down.
“If you see a $50/gt drop in other grades, busheling isn’t going to stay sideways,” a source noted, adding that shredded scrap is abundant. “I think we’ll see down $50-$60/gt for HMS, shredded and P&S scrap. The scrap yards have already taken their peddler prices down by at least $40/gt, and we know of at least one yard that’s taken their prices down $60/gt, and scrap is still flowing.”
Sources also agree that even with down pricing, dealers will be willing to sell.
“If shredded scrap is selling and there’s a 4 in front of the sales number, they’re going to sell,” a source continued. I think the shredders will be eager to sell. Maybe the cut grade guys will not sell as much, but we’ll see what happens.”
Another source said he doesn’t believe they’ll be a big drop in pricing for obsolete scrap “if the mills want to keep melting. Mill order books are full, and they can’t melt without scrap,” he said. “Right now we have to just hang onto our hats and enjoy the ride.”