US April scrap prices just settled a week ago, but expectations for May are already starting to emerge. However, source note that current expectations are largely fluid and could fluctuate in the upcoming days.
For example, on Monday, some sources close to SteelOrbis believed that May’s domestic scrap prices could hold at sideways or “face additional downward pressure” for two key reasons: first, on April 8, SteelOrbis reported that dock delivered prices for HMS I/II 80:20 on the East coast had softened slightly week-over-week, which was magnifying scrap yards concerns about May; second, scrap inflows have remained strong.
“Peddler prices are still good even with [April scrap prices being softer than prices in March], the inflow is still coming,” a source said at the time.
Yet by Tuesday, sentiment had taken a turn for the better. News that exporters on the East coast and in Texas had raised their dock prices had many questioning whether that would reverberate domestically in May.
“After we heard that the exporters raised their dock prices on Monday afternoon, and with the fact that one of the Midwest mills needs more tons, and another called us today to book more tons at April prices, that could change things,” an East-coast based source said. “It’s looking like whatever we gave back [on pricing] on cuts grades and shredded [scrap] in April, we could get that back in May. The fact that the exporters have pushed prices up has already had a big significance over here. We’re already getting calls from mills who want more scrap.”
Yesterday, SteelOrbis reported that dock prices in Los Angeles had also ticked upward, which also helped boost domestic sentiment.
Another source polled late last week said he believed that May prices could recover based on happenings within the finished steel market. “Steel prices keep going up and scrap suppliers will only tolerate the mills spread their margin so long,” he said.
For example, US flat rolled steel prices have firmed by “at least another $1.00 cwt. ($22/mt or $20/nt) in the current week, as HRC, CRC and coated steel prices still at record highs. Also worth mentioning is that on Tuesday, Atlas Tube announced yet another $5.00 cwt. ($110/mt or $100/nt) price increase for mechanical, HSS and piling products.
Yet news this week from Turkey that the high number of scrap cargo offers in the market had changed the market mood in terms of price expectations could be the latest wildcard. According to SteelOrbis’ reporting out of Istanbul, “scrap suppliers admit that the mood in the market has changed and that Turkish steelmakers now have leverage to exert more pressure on quotations. Some market players state that the deep-sea HMS I/II 80:20 scrap price may decrease to levels of $430/mt CFR.”
On the other hand, domestic sellers point out that “Turkey isn’t the only destination that the US ships scrap to, and we’re still shipping to other export destinations.”
For now, today’s snapshot of the market puts April pricing for cut grades and shredded scrap at up $20-$30/gt, with sideways expectations for busheling scrap. Yet as already mentioned, the situation is largely fluid and could change in the upcoming days.