The October buy cycle is less than a week away, and it appears that buyers and sellers have alternate opinions as to how next month’s prices should trend.
For example, whereas some sources have said they’re hearing that mills might try to take prices down by $10-$20/gt, other sources point to this week’s flat rolled price increase announced by Cleveland Cliffs’ indicating an intent to set a new HRC base price of $37.50 cwt. ($827/mt or $750/nt), FOB mill, adding the announcement has created widespread skepticism about mills’ potential attempt to take scrap prices down.
(SteelOrbis had previously reported that US HRC spot prices had been trending at $34-$36 cwt. ($750-$794/mt or $680-$720/nt), FOB mill, although deals up to $3.00 cwt. ($66/mt or $60/nt) below this range had been heard for volume orders.)
“There is a major shortage of scrap and it’s not getting any better. I can’t say I truly understand what’s going on with prime grade and this UAW strike. You would think with automotive slowing down that busheling scrap will slow down creating a stronger demand for that grade at some point in near future,” an Ohio Valley source said. “If I’m a mill buyer, I would want to jump ahead of this while prices are low and build up my inventory knowing that supply is tight to begin with. Supply will continue to get tighter as winter weather approaches if prices are too low, so I think there is intelligence to buying at stronger prices honestly in October. We’ll see what happens.”
Others agree.
“[We feel that October scrap prices] should be sideways but there is an overwhelming sentiment that the [mills] will leverage the auto strike, seasonal shutdowns, and general mediocre new steel pricing to try and push down at least $20/gt,” a Midwest source added, noting that Cliff’s announcement may try to bolster the “hopes and dreams” of sideways pricing.”
He also pointed out that regardless as to what happens in the short term, that new mills are set to come online in 2024, after which “demand should go through the roof and that should bolster pricing and demand.”
A final source said that until the market knows more about Cliff’s price increase and whether it’s accepted, he’s still thinking that scrap prices will come down $10-$20/gt across the board during next months’ buy cycle, especially in that “HRC is still being sold in the low $600s/nt.”
The October buy cycle will likely start next week.