As of this morning our scrap sources are telling Steel Market Update the February steel scrap market in the Midwestern U.S. is looking to be down $15-$20 per long ton.

Last week, most of the scrap dealers and the steel mills such as Steel Dynamics (SDI) and Nucor felt prices would move “sideways” and not move lower in February.

One of our sources provided this information to SMU this morning in an email:

“Talk on Friday afternoon was of OH Valley mills trying to buy down $20, and a few large scrap dealers basically willing to sell at that number. Export yards buying at down $15 or so from their peaks. News of some sales to Turkey in the last week at around $500 cfr Turkey which is down about $20-$25 from the few sales earlier this month. Maybe the Turks think this is a buying op. Weather has not been as much of a factor as I would have thought but it's still early and more bad (icy, sleet, snow) stuff expected in the NE this week. So we'll see...I still don't think dealers will panic and sell for down much more than $20 if that is even where the market ends up (I am not 100% convinced).”

Scrap prices and the rise in scrap prices have been one of the factors driving steel prices higher since November 2010. If February steel scrap prices move lower by $15-$20 per long ton we will have to see how this will impact steel buyers. Steel mills were raising prices to approximately $850 for hot rolled as late as Friday of last week. If scrap drops will the $850 “stick”?

Steel Market Update will have more on the movement of scrap prices and the reaction from steel buyers in Tuesday and Thursday issues of the Steel Market Update newsletter.

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