Lower US domestic demand coupled by a major drop in export scrap prices will likely force a decline in domestic scrap prices in November.
Market insiders are predicting a drop of at least $20/lt ($19.68/mt) to as much as $40/lt ($39.37/mt) in scrap prices across the board in November. On the busheling side, production cutbacks due to rapid domestic flat rolled price declines and scheduled maintenance outages are reducing mills' need to buy scrap; most will just buy what is immediately necessary while some mills may abstain from scrap purchases altogether. As for shredded scrap and HMS I scrap, prices are anticipated to soften as well, driven by an extremely soft export market throughout October with very little booking activity to speak of--US export scrap prices to Turkey dropped by as much as $30/mt a month ago and prices to the Far East dropped by about the same amount a week ago and are likely to continue to decline further over the next week.
The US domestic scrap market has also experienced lower scrap flow in the last couple weeks as some scrap suppliers are selling less scrap at the moment in anticipation that scrap prices will rise in the early winter months as they have historically, when the cold weather makes scrap collection and transportation difficult.
US domestic scrap prices for November will come out later this week, but for now, in the East Coast, busheling prices were in the range of $495 to $505/lt ($487 to $497/mt) in early October; shredded scrap prices were about $440 to $450/lt ($433 to $443/mt); and HMS I scrap prices were between $410 to $420 ($403 to $413/mt). October scrap prices in the Midwest were within a similar range with the exception of HMS I, which was about $5/lt ($4.92/mt) lower in the Midwest.
Meanwhile, pig iron prices are continuing to soften as a result of weakening demand and a severe depreciation of the Brazilian real. The latest pig iron transaction was heard at about $462/mt CFR Nola--an approximately $30/mt decline from two weeks ago.