US scrap prices to drop further in November

US scrap prices are expected to drop another $25 to $40/long ton ($24.61 to $39.37 /mt), depending on region, in November due to the continued soft demand in both the US domestic and export scrap markets.

US scrap dealers experienced a very soft market in October as domestic mills’ purchases slowed and export demand remained low, with excess scrap starting to accumulate on the coasts. US domestic demand should slow further as the fourth quarter progresses, most notably, with US Steel expected to idle a total of three blast furnaces for production adjustment and maintenance in November/December.

Dealers comment that the up-tick in US mills’ scrap demand seen in the third quarter was mainly due to inventory restocking and the federal “Cash for Clunkers” program, with little improvement observed in actual steel demand. In addition to the weak steel demand, both in the US and internationally, mills will avoid carrying heavy inventories into next year, and the US scrap market is therefore expected to remain soft through at least year-end.

Given the abovementioned market situation, US scrap prices are expected to drop by another $25 to $40/lt ($24.61 to $39.37 /mt), depending on region, in November, with the price decreases for prime grade scrap being greater than for obsolete scrap. On the US East Coast, busheling scrap prices are expected to fall approximately $40/lt ($39.37 /mt) to the level of $255 to $265/lt ($251 to $261 /mt), while East Coast shredded scrap and HMS I prices may drop around $25/lt ($24.61 /mt) to the range of $230 to $240 /lt ($226 to $236 /mt) and $215 to $225 /lt ($211 to $221 /mt) respectively.

At the end of October,  US East Coast busheling scrap prices stood at $295 to $305/lt ($290 to $300/mt); shredded scrap prices were at $255 to $265/lt ($251 to $261/mt); and HMS I ranged from $240 to $250/lt ($236 to $246/mt).