Sentiment within the US domestic scrap market has taken a dramatic shift in the past 10 days, as sources close to SteelOrbis say that precious expectations of sideways pricing are now “gone with the wind.”
As recently as early last week, nearly all scrap market polled sources said they believed that September prices would likely stay neutral. This suspicion was based on several factors, such as lessened inflow into scrap yards (due to a steep drop in prices in August) coupled with the expectation of lessened trading volumes in September, as four Nucor mills and US Steel’s Mon Valley Works were scheduled to have maintenance outages. Turkish import scrap cargo prices were also holding at sideways at that time, which led many to assume that a short-term pricing floor had been reached.
Since then, key developments have taken place within both the domestic and export markets:
First, on the final day of August, Delta Steel and David Joseph Company sent out a rash of cancellations. Many believed this was done in anticipation of lower prices in September.
Second, on Friday, September 2, SteelOrbis reported that Turkey’s import scrap market closed the week with a sharp decline. According to that report, “a last minute ex-Scandinavian booking has been disclosed to the market, rumored to have been done on Wednesday, August 31, with HMS I/II 80:20 scrap standing at $386-388/mt CFR. The details of the deal have not been shared by the time of publication, but most players believe that the deal has been done. Previously, ex-Baltic scrap prices were at $398/mt.” (Also, worth mentioning, is that prices within the Turkish import scrap market have continued to erode.)
This prompted many to believe that US mills would try to take prices down in September, and those predictions largely align with what’s been happening in the past 24 hours.
Yesterday, David Joseph came out at down $20/gt on P&S and down $30/gt on shredded. Although rumors about what might happen with HMS and prime grade scrap were largely silent, it was suspected that HMS might trade at down $20-$30/gt. The fate of primes, at that time, was largely unknown.
Today, other mills have started to release their prices for September. Pricing levels, however, are largely varied.
For example, whereas Delta has announced at down $30/gt for busheling, down $20/gt for shred, and sideways for P&S, SDI has come out at down $20/gt on primes and P&S, and at down $30/gt on HMS and shred.
“I think every grade now has a likelihood of falling by $20/gt this month,” a source said. “Nobody likes to see primes right on top of shred by there’s too much to go around right now.”
Settled scrap prices are expected to emerge by midday on Friday.