Flat rolled steel prices tend to follow scrap prices. Steel Market Update has noted steel prices as moving lower over the past week and now early indications are for scrap prices to move lower to sideways depending on where you are in the U.S..

Scrap continues to be a focus of many companies this week and early indications are for prices to tread sideways to down $20 per long ton in the Midwest while on the east coast the numbers appear to be moving a little lower due to the lack of export activity. The east numbers look to be down $20-$35 per long ton.

One large scrap buyer told SMU on Thursday, “Shred and secondary grades have been transacted at flat to down $20/gross ton with most landing in the $340-360 gross ton delivered range. Prompt industrial scrap is anywhere from flat to down $15/gt moving into the low $450s. Tight inventories at the scrap yards and steel mills have provided an adequate offset to the languishing export market as the market has started to reach a balance today. Specific attention will be focused on the mill operating rates and the scrap export market (currency/deep sea freights are main drivers) over the next 60-90 days.”

A Chicago area dealer informed SMU their transactions so far this week have been “sideways” while an east coast dealer informed us prices for shred are at $335-$340 per long ton which is a little lower than the Midwest price for shred which this source pegged at $350-$360 per long ton. Number 1 HMS is at $320 per long ton to the domestic mills. However, the yards on the east coast buying for export were only paying $275 per long ton. Our east coast dealer had one small sale so far this week for prime grade scrap (such as busheling) which they told us sold for $455 per long ton. That dealer also told us a number of the domestic mills are “not in the market” buying scrap right now…

The concern amongst all scrap dealers are the mill operating rates as mentioned by one scrap buyer above. One dealer told SMU, “If the mills ramp down [production] look out below…” Another way of saying prices could very well continue to fall from here if the mills slow down for any reason.

Steel Market Update indexes scrap and flat rolled steel prices (hot rolled, cold rolled, galvanized and Galvalume) on a weekly basis. We also publish a newsletter about the flat rolled steel business three times per week. To sign up for a free 4-week trial go to www.steelmarketupdate.com and click on the free trial picture on the right hand side of the site.