Last week, SteelOrbis sources throughout the US said they believed that September scrap prices were poised to soften. The reasoning behind that rationale, sources said, was linked to “simple economics,” notably, that domestic scrap inflow is still good, East coast export activity has been lagging, and supply is outpacing demand. In fact, one source close to SteelOrbis said that shredders in his region have recently dropped their peddler prices about $40/gt, to slow the flow of material into their yard.
This week’s general consensus is similar to what was heard last week; cut grades and shredded scrap are likely to come down by $20-$30/gt, depending on the grade and the region. What has changed, however, is that busheling scrap prices are likely to face greater downward pressure.
“David Joseph is already saying that primes will be down by about $40/gt, and that other grades will be down by about $30/gt,” a source said, noting that recent drops in pig iron prices may be causing some mills to reevaluate their melt programs.
A second source agreed.
“If [the mills] take 10% of what they’re using for prime, and replace that with pig iron, that’s a lot of [prime grade scrap tons] that won’t be needed,” he added. “I wouldn’t be surprised if prime came down by $50/gt next month if the mills already bought a large amount of pig iron.”
Scrap is expected to start trading in the early part of next week. It’s unclear whether prices will settle before, or after the Labor Day holiday weekend.