Steel Products
Early Debate Regarding March Scrap Prices – Up, Down or Sideways?
Written by John Packard
February 15, 2013
With scrap prices taking a bit of a tumble during the month of February – which did not lend a helping hand to the domestic mills who wished to raise prices – all eyes are now already focused on March. What will March bring for the industry? Will the month come in like a lion – pushing scrap prices up by $20 to $30 per gross ton as some in the industry believe? Or, will the month come in tame and roll over right where we are? Then there are those who are of the mind that March will be another month where scrap will give up another $20 per gross ton (or more). Each scenario is being discussed and debated within the industry.
It is, as one dealer told SMU, “way too early to tell…” but, with the drop in the indices this week, the Chinese steel on holiday (thus foreign is quiet) people are looking for scrap to be the leader. So, here is what we are hearing.
One of our east coast sources is telling us, “A lot will depend on what’s happening in export right before the March buy which probably won’t begin until March 4th anyway. Right now, I can’t see major moves either way. Demand overall is not that much changed from February. Seasonally March is usually an up month. Mills buy heavy in January pushing the market higher, they back off for February because of what they bought in January and it’s a shorter month, then need to buy more in March because their inventories are a little lower and it’s a longer good melting month. I would bet that happens again this year. But don’t expect major price moves in March…back to January may be as good as we can do.”
A second source pointed to the strong flows of prime scrap (due to automotive production and decent manufacturing) and an abundance of shredder feed combined with the stronger dollar keeping the Turkish mills away from the U.S. markets. “I think scrap remains under pressure and I don’t see scrap going up in March unless the mini’s order book gets stronger.”
“As the domestic mill production continues to improve and the scrap export market returns, scrap will likely return to January levels in March. Domestic scrap prices remain attractive relative to global scrap and domestic steel prices. Inventories remain lean and several mills were unable to complete their buying programs in February, particularly on cut grades,” is what we heard from a multi-location dealer.
While another source told us one of the mini-mills bought a large amount of busheling at the February numbers so they would not be in the market (or as large a player in the market) for March. In their opinion busheling will be “sideways to down” in March.
During the middle of this past month dealers were hoping prices would move sideways – a sure fire sign that they would trend lower. This month the tea leaves are a little more difficult to read as opinions are all over the board. However, in general SMU is hearing from those who are actually buying and selling scrap to the domestic mills, the opinion that prices could return to January levels. But, it is too early to tell…

John Packard
Read more from John PackardLatest in Steel Products

September energy market update
In this Premium analysis we examine North American oil and natural gas prices, drill rig activity, and crude oil stock levels through September. Trends in energy prices and rig counts serve as leading indicators for oil country tubular goods (OCTG) and line pipe demand.

Market says cutting interest rates will spur stalled domestic plate demand
Market sources say demand for domestic plate refuses to budge despite stagnating prices.

U.S. Steel to halt slab conversion at Granite City Works
U.S. Steel said it plans to reduce slab consumption at its Granite City Works near St. Louis, a company spokesperson said on Monday. The Pittsburgh-based steelmaker will shift the production and processing of steel slabs to its Mon Valley Works near Pittsburgh and its Gary Works near Chicago. Citing a United Steelworkers (USW) union memo, […]

SMU Week in Review: September 1-5
Here are highlights of what’s happened this past week and a few upcoming things to keep an eye on.

HR Futures: Market finds footing on supply-side mechanics
As Labor Day marks the transition into fall, the steel market enters September with a similar sense of change. Supply-side fundamentals are beginning to show signs of restraint: imports are limited, outages loom, and production is capped, setting the stage for a market that feels steady on the surface but still unsettled underneath.