Scrap prices appear to be jumping up this month, and while in mid-November it was thought the market could be up by $40/gt or more, today’s number point to a much stronger uptrend.
Earlier today, multiple SteelOrbis sources confirmed that Delta Steel came out at up $70/gt on busheling, P&S and HMS scrap for the current month’s buy cycle, and while the market is not expected to settle until Friday at the latest, the announcement has many wondering how high prices could go.
“A lot of us suspected the market would be up $50/gt, and there were some rumors that prices could be up by as much as $60/gt, but the up $70/gt out of Delta surprised us,” a source said. “At this point we’re hanging onto our hats and our glasses and waiting to see how the other mills respond.”
Another source agreed. “The guys I talk to and I agree that it will be interesting to see how Delta’s announcement tracks with the other mills in the region,” he said, adding that mills in the Detroit area have also come out at up $70/gt. “They almost have to at this point,” he continued.
A Chicago-based source reported hearing similar pricing from the mills he sells to. “I’ve been hearing $70/gt across the board, and I believe that’s where we’re at,” he said. However, other sources note that other Midwest areas seem to be up $50-$60/gt, whereas mills in Houston and the Southeast appear to be up $50/gt, with "hopes of up settled prices at up $50-$60/gt in the Southeast"
There are several factors that seem to be driving this month’s uptrend. First and foremost, winter weather has started to hit parts of the Northeast and Midwest, which tends to lessen scrap collection. Second, East coast dock prices are up substantially since early November. On November 4, SteelOrbis reported that Turkish mills booked several HMS I/II 80:20 scrap cargoes at $293-$296/mt CFR. Today, the benchmark price for import HMS I/II 80:20 scrap is closer to $360/mt CFR. Although ex-US bookings have been quiet, US domestic mills understand the need to compete with dock pricing, if they want to get the scrap they need.
A final factor relates to increased domestic demand. “Big River [Steel] is up and running and of course they need scrap,” another source said. “This was obviously going to have an impact on the market.”