Last week, numerous SteelOrbis sources expressed concern that US domestic scrap prices could plunge by as much as $50/gt ($51/mt) during the April buy cycle. This week, the market’s already bleak sentiment has taken another downturn.
Dock prices are tumbling on both coasts, US Steel has announced plans to idle flats and tubular mills, and Brent crude oil prices, which were recorded at more than $65 in January, have crashed to roughly $25 per barrel.
“It’s ugly out there. We think the market is going to be down between $50-$70/gt ($51-$71/mt), if mills are even going to buy,” a source said. “We offered at down $50/gt and the mills we work with said they weren’t interested.”
Another source agreed.
“Business stinks and I’m running out of bourbon,” he said. “We have heard that David Joseph put out an announcement that multiple mills won’t be buying in April and that there are directives at the mill level, to use as much internal scrap as possible.”
Sources in Chicago and Ohio say they agree that the market is likely to settle at levels below what was talked about last week. However, they have said that busheling scrap is “very tight.”
“It makes sense. There’s zero automotive busheling right now,” a source commented.
A second source said that while supply for busheling is low, demand is also low. “There is talk that the busheling market could be sideways in April, but I still believe it’s going to be down.”