Domestic June scrap prices are expected to move in different directions for different grades and vary from region to region.
The US scrap market has been slow in May, as there is not a lot of scrap demand in both domestic and export markets. Domestic mills are not buying aggressively for the time being. However, as the domestic mills are not carrying a big inventory, it is expected they will have to buy some scrap in June to meet the increasing capacity rate.
Meanwhile, the US scrap export market remains quiet. There is hardly any booking to be seen from Turkey. The Far East is not buying a lot of scrap as well. Export scrap prices have come down approximately $50/mt from two weeks ago. Lack of export scrap demand and softening export scrap prices prevent the domestic scrap prices to bounce back up in June.
As there is not enough scrap demand from both domestic and export market to push up the domestic scrap prices, US scrap market in June will stay more or less the same as May. Market sources expect the US June scrap prices to stay sideways on the East Coast, while in the Midwest, industrial grade scrap prices could go sideways to slightly up as the bundles and busheling are holding fairly strong, whereas the obsolete grade prices could go sideways to approximately $10 to $15/lt ($9.84 to $14.76/mt) down in June.
In May, the East Coast prices for busheling were in the level of $455 to $465/lt ($447.81 to $457.66/mt), shredded scrap were between $350 and $360/lt ($344.47 to $354.31/mt), and HMS I ranged at $335 to $345/lt ($329.71 to $339.55/mt).
On the other hand, the pig iron market is weakening for the time being. Brazilian pig iron is offering at $460-470/mt CFR Nola. Prices have come down approximately $40/mt from three weeks ago. "US mills are not in the big mood to buy pig iron as the scrap market is weaker; they don't want to buy the expensive pig iron now," one pig iron dealer said.
Pig iron supply in Brazil is continually poor. If the pig iron market remains sluggish, the Brazilian pig iron mills will cut the capacity rate. Pig iron producers are hoping the iron ore prices will go down, so their input costs will be lower.
The latest statistics show that total amount of pig iron imported into the US in March 2010 was 380,693 mt, representing an increase of 231,098 mt when compared to the figure of 149,595 mt. The main pig iron import sources for the US during March were: Ukraine, at 148 391 mt; Brazil, at 132,176 mt; and Russia, at 80,830 mt. Other countries which export a smaller amount of pig iron to the US during the corresponding period include South Africa and Canada.