The early September scrap buy-cycle surprised dealers with a solid sideways move in most of the US inland regions. The expectations of domestic scrap prices increasing by $20-30/mt were only partially realized on the East coast on export competition. According to sources, the US domestic market is “looking down for October.” Several east coast scrap dealers suggested a price erosion of $20-30/mt on the East coast while several inland scrap dealers estimated the potential for the price decrease in their regions at up to $20/mt.
The downward export effect, sufficient scrap flows into yards, and tight buying plans by mills are said to be contributing to the downward expectations. Mills in the Pittsburgh and Northern Ohio regions, for example, are “doing okay but have some planned outages in October that will cut into demand and in some cases may reduce production by up to 35 percent,” according to one source. Regarding scrap supply, several sources are reporting reductions in yard buying prices to scrap collectors to slow the flow of scrap and minimize inventories to better balance supply and demand.
In the Central Midwest, a source reported limited to non-existent spring boarding of scrap—when shipments are brought in from outside their local region—to fill their scrap needs. Mills’ scrap needs are expected to be filled primarily by local suppliers in the October scrap buy-cycle. A large mill in the region, which had purchased a smaller buy of HMS 1 in early September, for example, has stopped all inbound shipments for the rest of the month given the anticipation of reduced pricing in October. Several mills are providing feedback to dealers of excess shredded scrap in the marketplace which has resulted in several dealers informing SteelOrbis of mill efforts in the region that may drive prices down by $10-15/mt.
Prime scrap grades, such as busheling, are not expected to be “pushed down as much as shredded scrap on tight supply and consistent demand,” according to several sources.