Scrap Prices Jump on Strong Export Demand

Similarly, an East Coast dealer reported prices up $10 to $20 per gross ton from July levels. Export pricing continued to increase over the past week with the latest U.S. deals reaching $331 per metric ton CIF Turkey on Friday. “Expectations are that prices still have room to run on the back of improved Turkish and international demand,” he says.

Other Eastern, Southern, Ohio Valley and Pittsburgh area mills had to increase prices $20 to compete with the export prices. In a few cases, some buyers paid slightly more for prompt truck shipments due to continued slow railcar movements. The Chicago district settled for $10 increases, though plenty of Chicago scrap made its way down river. While there are still many open variables, the East Coast dealer expects September prices to increase further due to the growing export demand and likely some bigger U.S. domestic mill buying programs.

Another source reports Detroit mills bought shredded at $300 per ton, up $10; busheling at $390, up $20; and P&S at $300, up $10.

The Southern and Northeastern markets are up a solid $20 to $25 per gross ton, driven largely by exports and solid demand from EAF producers in the South.  “Chicago and Detroit initially only went down $10, but met resistance and bought additional at higher levels,” says another dealer. The September market will be dependent on export activity and how much busheling will be produced by automotive after summer retooling and vacations are over, he says.  “It will be sideways at worst.”

He estimates pig iron offers for October at roughly $375 per metric ton CFR, noting that the outage at Nucor’s Louisiana DRI plant is mostly affecting scrap rather than pig iron pricing.

The average price in Detroit rose by $10, agrees scrap expert Mike Marley of World Steel Dynamics. “The Detroit area mill that is often the pricing pacesetter managed to hold the raise to $10 because it had plenty of shredded on the ground and in its supply pipeline. Also, because output of bundles and busheling was expected to return to pre-summer-vacation levels, dealers were not willing to hold much of that prime scrap off the market this month,” he says.

Marley notes there was more buying out of Canada because of the stronger position of the Canadian loonie versus the U.S. dollar. Sideways prices from the Ontario mills made the U.S. market more attractive to some Canadian scrap dealers. That included delivered-to-the-mill prices in Detroit ranging from $380-395 per gross ton for busheling and bundles; $300-310 for shredded; $295-305 for P&S; and $295-290 for HMS1.

Prices are at the Ohio Valley level or slightly higher elsewhere except in the local market in Chicago where increases ranged from just $10 to $15 per ton, Marley says. He estimates shredded at $295 and prime at $370-375 per ton in Chicago. 

Scrap exports are driving the price increases, especially for the East Coast mills. One of the smaller EAFs paid as much as $405 for busheling. HMS is at least $280, P&S is $300 and shredded is $310-315 per ton. “This is quite a change for these mills since they had been paying about $20 per ton less for all grades of scrap than the mills in the Midwest and South for much of the past year and a half,” Marley says.

He predicts exports will continue to drive the market, especially if Turkey continues to raise the ante. “The Turks are selling rebar for $510-520 per metric ton ex-works. I figure the conversion cost going from scrap to rebar at $140-150 per ton. So that means they could pay as much as $350 for scrap and still have a profit margin. The average price for imported 80/20 is now about $330 per metric ton.”

Marley also expects some domestic mills to be more active as buyers at mid-August. “The big unknown is whether the mills have gotten all they need this month. If they are short and the transport problems continue, we could see some back in the market at mid-month and bidding up the prices.”

Written by: Tim Triplett, Tim@SteelMarketUpdate.com