Scrap Prices North America

Ferrous Scrap Prices for May Expected to Trade Sideways

Written by John Packard


SMU sources are expecting scrap prices to remain somewhat range-bound as the scrap dealers begin negotiations with the domestic steel mills for the month of May. Most dealers are forecasting May settlement prices to be within $10 per ton of what we saw in April and this can vary from region to region.

We understand from multiple sources that Nucor and perhaps other EAF mills have ordered a number of foreign scrap cargos of prime scrap (busheling/bundles) which will help reduce pressure on prime scrap availability. “Despite good domestic demand, Nucor and other are expecting arrival of several prime scrap cargoes which should take the pressure off prime here.  So, expect these prices to be off in May by $10-20.  This should shrink the spread between shredded/HMS and prime as those grades may trade sideways,” is what one of our sources told us over the weekend.

That same source noted that the influx of prime grades of scrap would help drive down pig iron prices from about $400 per metric ton CFR to $370-$375 for July/August shipment.

One of our sources located on the east coast USA told us:

“Domestic demand is stable and strong enough to support a sideways market for much of the country in May, though some US regions could experience softer sideways (in the South) and others could experience stronger sideways (in the Ohio Valley) depending on particular local mill demand.  OCTG mills in particular are very busy and have strong buy programs in May.   

“Inflows in the northern part of the country have been mediocre relative to typical surging April supply patterns.  It’s a bit of a different story in the South where some larger demo projects and stronger seasonal flows could cap the market or softly push it lower.

“Export pricing has turned out to be stable.  There was some concern early last week that the next export sales would be in the low-$260s CIF range but a US East Coast cargo was sold toward the end of last week at $269 CIF for 80/20.  That momentum combined with stable pig iron prices, and, more importantly, rising iron Fe and finished Chinese steel prices toward the end of last week as well, seemed to cancel out talk of weakening markets next week.” 

Is there more than enough scrap available to satisfy the appetites of the domestic steel mills (especially if the rumor of a dozen cargos of prime grade scrap will be hitting the docks in May and June)? We will find out later this week as negotiations get going in earnest on Monday.

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