Market sources inform SteelOrbis that scrap prices may rise $25-30/mt across all grades during the December buying period. Mills in the Midwest and the Southern US anticipate a $30-40/mt increase across all grades in December. Last week, domestic HMS I scrap prices in the East Coast of US were at $188-198/mt delivered to customer.
Multiple factors are currently driving expectations including recent demand and price increases for domestic finished goods, heightened demand from flat producers, and a tight supply of domestic scrap. In addition, favorably priced imports are presently scarce, while global market prices for near substitutes such as billet and pig iron have risen to uncompetitive levels.
In November, US flat-rolled mills increased prices by nearly $100/mt. Order lead times have increased for HRC to four to five weeks, while the lead times for cold-rolled and galvanized products have stretched to up to eight weeks. Sources inform SteelOrbis that flat-rolled mills are likely to acquire as much material as possible, early in the buying cycle in order to avoid running out. For some US mills, the search for favorably priced material began prior to Thanksgiving, and others have begun issuing ‘price-to-be-determined' purchase orders.
Another key factor driving positive expectations for the US scrap market in December is the relatively short supply of competitively priced material available on an import basis. Pig iron, for example, has increased to $320-330/mt CFR New Orleans, which translates to roughly $360-375/mt delivery to mill.
Seasonal factors, including reduced intake due to inclement weather, are likely to limit the availability of material in December. For instance, planned holiday shutdowns at auto stamping plants will contribute to a shortage of domestic industrial scrap into January. Many scrap yards are reporting that supplies on the ground are extremely tight. Some dealers plan to limit their offerings during the December buy, as based upon the expectation of higher prices and demand in January.