Strong Scrap Buying by Turkish Mills Could Move East Coast Prices Slightly Higher

Early indications from our scrap sources are pointing to a sideways market for the month of March in the Midwest. On the east coast obsolete grades (HMS, etc.) are finding a bottom as Turkish mills are buying and starting to pay higher prices than earlier this month.

One of our east coast dealers told SMU, “Export prices have jumped to over $450/MT cfr and will go at least a little higher. Exporters are slow to raise prices to buy material but they have started. Springboard prices for 80/20 to the docks are at $410/GT. Local prices are still in the $390/GT range. So, yes there's a floor under the market for obsolete grades.

Depending on how aggressive mills need to be to buy material in March will determine how quickly the market establishes itself. My guess is that it will be early next week until we see the market's levels take shape.”

One of our upper Midwest scrap sources told us the mills were busy “talking the market down” although they too have pegged their hopes for a sideways market due to Turkey being back in the market. “I don’t see where mills can take it down,” our source told us earlier today.

A second large Midwest scrap company was a little more skeptical about the export market having the ability to support the domestic market on secondary grades (obsolete) of scrap. They also told us, “…Suffice it to say that EAF flat rolled producers have seen a marked decrease in the backlogs. I’m anticipating primes [prime grades of scrap like busheling] will be down $20-$30/gross ton and secondary grades will likely hold sideways in the near term.”

In the south SMU was being led to believe prices would trend “sideways to up slightly” and a comment was made that the overhang of unsold pig iron was greatly reduced – but not yet totally gone.

On Friday of this past week Mike Marley scrap guru for World Steel Dynamics pointed out there are heavy flows of number 1 busheling and other prime grades of scrap coming out of Midwest manufacturing plants. He also pointed out other grades of scrap are “in abundance in that region” as “Demolition work at many of the now-abandoned auto plants is underway and pouring a substantial amount of plate and structural scrap into the market.”

He too is reporting hearing many comments from dealers that scrap prices will trend “strong sideways” or “sideways to up” for the month of March.

One of the lingering questions out there is has the warm weather prompted flows of obsolete scrap to be early into the dealer yards. Normally the market is flooded with obsolete scrap during the months of March and April as spring arrives along with warmer weather and a loss of snow cover on the ground. If the scrap arrived early and slow from here this could help tighten the market going forward. However, if the heavy flows continue there could be additional pressure to lower prices.

Like the steel industry the scrap business is never boring.