Early Debate Regarding March Scrap Prices – Up, Down or Sideways?

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…