Ferrous Scrap Sees Busheling Up $10, Obsolete Grades Sideways

As the week progressed, our sources tell us, another EAF mill through its scrap arm pushed for lower pricing and did not buy prior to the Fourth of July holiday as the Detroit and other EAFs in the Midwest did. However, by the end of the week, this mill was reported to have paid up $10 on busheling for their Midwest mills and sideways in the South. Shred was reported to have traded at the same pricing as in June.

One of the East Coast scrap traders told us, “I did our trading on Monday and Tuesday this week and so have been largely absent from the market since then. We sold obsoletes at sideways prices and prime at higher prices by $10. Demand was firm and it was no secret that there was a lot of shred available. That shred supply factor is largely seasonal, in my opinion, but also a sign of a good economy where people are buying new stuff and discarding old stuff, and partially in response to continuous solid pricing at the shredders.    

“Apparently later in the week DJJ was taking advantage of sellers who had not sold early on and still needed to sell scrap. The mills have done a good job of not chasing the scrap market for the most part since the 232-effect began earlier this year. At the end of the day, they have been able to manage that because it’s a lot of sellers selling to very few buyers. Hence, the mills’ leverage on both the scrap procurement and finished steel sides.”

Ferrous scrap guru Mike Marley reported on Friday that offshore demand for ferrous scrap has been “stable” for the past few weeks. He pegged export prices as follows: “Prices of the bellwether 80/20 heavy melt remain between $350 and $355 per tonne delivered to a Turkish port. U.S. East Coast exporters have raised their buying prices for export heavy melt by $10 to $295 per gross ton, and as much as $310 per ton to their largest and more distant domestic suppliers. Prices for containerized shipments of shredded delivered to the docks remain at about $340-345 per tonne.”

When asked for their prognostications regarding August, a number of sources advised there is a bearish sentiment building. Our East Coast source spelled out his feelings with, “As far as August, it’s a ways away still and some bearish sentiment has emerged. Flows into our yards were slower this week, but that is partially the effect of the holiday. Next week will be telling as shredders will adjust pricing to reflect their needs for July and anticipate what will happen in August. It’s entirely possible that flows will slow down over the course of July if shredders lower prices and we roll into August with limited downside, if any. It’s hard to imagine a major scrap correction absent some change in finished pricing or dynamics in that market.”

Another collector of scrap pricing advised SMU, “It looks like an avalanche of shred is on the market and shred could fall by $20 in August.”

SMU will be reporting on market developments as they happen.