US scrap prices show large gains in March

Scrap prices have gone up strongly in both international and domestic markets as of early March with increasing scrap demand and lack of supply.

When compared to the prices in early February, busheling prices have jumped up approximately $50 to $70/long ton (lt) ($49.21 to $68.89/mt), depending on the region, while shredded scrap prices and HMS I prices have gone up about $30 to $35/lt ($29.53 to $34.45/mt) as of the beginning of March. Current East Coast prices for busheling are in the level of $450 to $460/lt ($442.89 to $452.74/mt), shredded scrap prices stand at $360 to $370/lt ($354.31 to $364.16/mt), and HMS I prices range between $325 to $335/lt ($319.87 to $329.71/mt).  Corresponding raw materials surcharges for longs and flat rolled products are also expected to go up significantly and provide a shot in the arm for steel mills to raise their prices further. 

The US scrap market is very strong for the time being. Bad weather delayed scrap shipments into dealers’ yards and mills have not received their February scrap orders yet. Scrap supply is typically short during the winter months, and the current market is based on lack of scrap availability; domestic mills do not have adequate scrap inventory. On the other hand, production rates for the domestic mills, particularly flat rolled mills, are gradually increasing. With the tight scrap supply and the increasing scrap demand from the flat rolled mills (primarily for automotive sector), US scrap prices have gone up significantly in March.

However, as spring weather approaches, scrap supply will loosen with easier scrap collection and better scrap flow. Higher prices will also attract more scrap collection.  Nevertheless, market sources do not expect a large price drop in April at this time, as the steel production is also expected to increase gradually.

On the international market, scrap prices have also increased approximately $20 to $30/mt from a week ago due to the demand from the producers to replenish the low inventory level. Currently, the ex-US HMS I/II 80:20 scrap price is at $375/mt CFR Turkey, and ex-European scrap offers for HMS I/II 70:30 are at $342/mt CFR.