Ferrous Scrap Prices Bottomed in June – Sideways to Up $20 in July (maybe...)

With the 4th of July holiday staring at both the buyers and sellers of scrap, the expectation is many of the deals will get done by the middle of next week.

At the moment, many dealers are selling their steel on a TBD (to be determined) basis. This allows both parties to know that they have firm commitments on scrap supply but the price is based on the settlement prices published by AMM or one of the other organizations which index scrap by product and regional market.

We heard from Mike Marley, steel guru for Metal Prices, earlier today who told us, “The big “IF” could come early next week. If some EAF mills buy a significant amount of scrap before the July 4th holiday, that could undermine the scrap market the following week. Small and mid-sized dealers who wait till after the holiday weekend and think they could get even higher prices could be left out. This could be one of those markets where the first sales are the best sales.”

Mr. Marley estimates that this could be a “short-lived rally.” He told us that Nucor is short material (scrap) because of the outage at their new DRI facility in Louisiana. The DRI plant is scheduled to restart next week but it is not yet known how soon it will impact their appetite for scrap.

He also advised us that the Turkish steel mills bought one lone cargo of scrap off the east coast this week. He said, “The price was up a mere $1 per tonne. Just one cargo and not much of a price gain.”

We are hearing from other sources that there is plenty of shredded scrap in the Detroit market and that it should move sideways. Chicago is tight on prime grades (such as #1 busheling and bundles) with sideways to a slight uptick expected there.

The question is one of demand. Did the mills buy enough scrap during the month of June or will they need to increase purchases as they move into July? We will have our answer sometime next week.