The outlook for September US scrap pricing during this month’s buy-cycle negotiations is expected to settle sideways for a fourth month for most grades, though prime scrap grades like busheling and potentially obsolete shredded scrap grades could see lower prices, market insiders told SteelOrbis this week.
Scrap insiders said yearly mill maintenance programs that begin in September and typically end in November could limit local mill scrap buys this month. Scrap insiders added that prime supply remains abundant since mills were expected to buy more prime scrap during August supply negotiations because many expected US President Trump to follow though on threats to implement 50 percent tariffs on Brazilian pig iron, a key component of US steel production. Once Trump later recanted on the threats -and mills failed to buy- suppliers found they had too much prime supply on hand, insiders said. Insiders also added that continued declines in US flat steel pricing also was not supportive of domestic scrap.
“Mills didn’t buy the scrap that (suppliers) expected them to, because the (pig iron) tariffs didn’t happen,” said one Midwest scrap insider. “So, it created a primes overhang of excess supply,” he said. “ Primes didn’t go down in August though,” he added. “And, if the overhang persists in September, I suspect primes could go down $10-20/gt.”
“Regarding September scrap, I don’t see how it can do anything but go down,” remarked another Midwest scrap insider. “We see primes going down, though obsolete grades also should be weaker.”
“Scrap is poised for a sideways-to-soft sideways move in September” remarked still another import long steel market insider that follows domestic scrap pricing for long steel price clues. “Obsolete grades are seen flat while exports to Turkey are hovering around $345-348 CFR for HMS and around $368 CFR for shredded. The sluggish HRC market and maintenance outages are limiting mill appetite for scrap, keeping raw material pressure (on long steel prices) in check.”
Late today, another insider said September markets were near settlement, though a poll of other SteelOrbis contacts indicated supply was still actively trading.
“Everyone has mostly settled down $20 on primes and sideways on everything else,” the final insider told SteelOrbis.
In the US flat steel markets, US Midwest flat steel pricing continued down amid reports of most trades done on average at $810/nt ($893/mt) or $40.50/cwt., off from $820/nt ($904/mt), or $41.00/cwt., one week earlier. Flat steel insiders said HRC pricing could be nearing a bottom at $800/nt ($882/mt) or $40/cwt., as limited reports emerge of improved domestic demand from mills.
Based on a sideways to lower September scrap outlook, US Midwest prime busheling scrap in the Ohio Valley could settle at to $20/gt below the $435-460/gt ($443-468/mt) August settlement, while shredded scrap might settle at or $10/gt below the August settlement at $375-380/gt ($381-387/mt). Ohio Valley P&S and HMS grades are seen sideways to August at $361-371/gt ($367-377/mt) and $325-345/gt ($330-387/mt), respectively, scrap insiders told SteelOrbis.
In the US Northeast, a sideways to potentially lower September scrap settle would put prime busheling grade material at or $20/gt below $380-400/gt ($387-407/mt), while shredded grades could settle at or $10/gt below August’s $325-335/gt ($330-342/mt) settlement. P&S and HMS grades might finish sideways to the $295-305/gt ($300-310/mt) and 305-320/gt ($310-325/mt), respective August settles, scrap insiders told SteelOrbis this week.