Analysis
October 22, 2013
Final Thoughts
Written by John Packard
The early forecast is for scrap prices to increase by $20 per gross ton in early November. If this happens it could help keep domestic mill prices at current levels (or slightly higher). It could also prompt the domestic mills to ask for another price increase.
Longer term the analysts believe domestic scrap prices will drop. In a note to their customers regarding AK Steel, KeyBanc analyst Mark Parr said this about scrap, “The most aggressive piece of our thesis is likely on domestic scrap pricing, where we expect sizeable downside to develop as Nucor Corporation (NUE-NYSE) brings on its 2.5 million-ton [annualized] DRI facility into 2014 and post-consumer scrap export volumes remain weak.”
Nucor advised that they are testing the DRI plant right now and it should come online at the end of this quarter once the damaged storage facility is replaced.
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